Updated on: May 8, 2020

It’s Not Too Early to Start Budgeting for Holiday Shopping

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‘Tis the season to … go broke buying gifts for your friends and family? We certainly hope not!

The holiday shopping season is coming up, and it can get pretty expensive. You don’t want to have a reputation for being a stingy gift giver, but you also don’t want to rack up credit card balances or take out an unnecessary personal loan to cover your holiday spending.

That’s why we spoke to the experts for tips on how to knock out your holiday shopping without emptying your bank account.

Don’t wait until the night before

Start planning right now. The sooner you start preparing, the better off you’ll be. Then you can sit back and enjoy a big glass of eggnog while everyone else is out scrambling for last-minute gifts.

As Sean Potter, the writer behind My Money Wizard, told us: “Like anything else related to personal finance, managing your holiday shopping spending is all about planning. The time to allot for your holiday spending is now, rather than a last-minute budgetary surprise on Christmas Eve.”

Make a list, check it twice

How should you start? Just like Santa would: Make a list.

“Know what you want to buy before it goes on sale (or sells out) by creating a gift list for everyone on your list,” advises Kendal Perez, savings expert with Coupon Sherpa. Download an app like Santa’s Bag (iPhone) or Christmas Gift List (Android) to keep the list and your budget at your fingertips.”

And speaking of budgets, that should be your very next step.

Create a budget for all your holiday expenses

Perez walked us through her budget process:

Gifts are not the only expense associated with the holidays, and the only way to get a clear understanding of how much you could spend is to review how much you did spend during the previous year. Review bank and credit card statements during last year’s holiday season and note how much you spent in each category, including food, travel, gifts, events, etc.

If you want to spend less this year, start chatting with friends and family to establish expectations so there are no surprises. Now is the time to suggest that gifts only be purchased for kids in the family, or to organize a Secret Santa swap so you’re only responsible for one gift instead of multiple gifts.

Once you calculate your potential spending and set expectations for the upcoming holiday, create a budget for this season. It can be an overall, not-to-exceed number, or it can be individual budgets for people on your list, plus other expenses, like groceries, travel, etc.

If you need help with a budget, check out our post on budgeting for beginners and this follow-up post on sticking to your budget once you’ve set it.

Again: Make sure your accounting “accounts” for all expenses

Karen Hoxmeier, creator and owner of My Bargain Buddy, also supports starting off with a list and budget:

Once you’ve determined how much money you have in your holiday budget, make a list of all the people you need to purchase a gift for and assign each person a maximum dollar amount for their gift. If you are hosting a holiday party, set the maximum amount you can spend on food, beverages, decorations, etc. The total for gifts and entertaining cannot exceed the amount you set for your holiday budget. Every time you make a purchase, log it on your spreadsheet.

Save paycheck to paycheck

Ashley Feinstein Gerstley, money coach and founder of The Fiscal Femme, breaks down her ideal method for holiday shopping preparation here:

Map out your paychecks. How many paydays do you have from now until you plan to make each of your holiday purchases? Considering your overall earnings for the rest of the year will help you to figure out your budget.

Make some calculations. Going to need $500 for your holiday plans, and have five paychecks until it is time to spend? Start by putting away $100 per paycheck. How much do you want to put aside per paycheck to hit your holiday spend plan?

Create a holiday fund

Gerstley says the best way to way to save for the holidays is to keep the money separate from your regular accounts. If possible, create a separate savings account that is dedicated specifically for holiday spending. You can also set up an automatic transfer, so the amount you calculate per paycheck automatically moves to your holiday fund every time you are paid. Spread out your shopping year-round.

Justin Lavelle, chief communications officer at BeenVerified, agrees with the concept of saving and spending for the holidays over time, as he says it’s easier to budget if you give yourself more time versus trying to pay off a single large credit card bill after the holidays.

“Start shopping now. Spreading out the gift buying will allow you to spread out the cost of shopping,” he says. “Do a little gift shopping each month and you can even out the bills, so you avoid that big shock in the New Year.”

Save money by shopping smarter

Starting early means you’ll have a lot of time to keep an eye out for the best deals. The people on your list will not appreciate a gift more just because you had to spend additional money on it, so why should you?

Gerstley suggests maximizing your dollars to work in your favor by purchasing on-sale items now instead of later. “Perhaps you can snag a deal in November for a gift you’re planning on buying anyway,” she says. “Look through your holiday expense plan and estimate when you want to make each of the purchases.”

Natasha Rachel Smith, financial expert at TopCashBack, provided us with some tips for saving:

Shop smartly. Do research prior to going shopping. Identify the items you need to buy, then head online and check where you can score them at the cheapest price. It is senseless to pay more for the same item at a different store.

When shopping online, make sure you get free shipping. Competition online is fierce during the holiday season, so plenty of retailers will be offering free shipping that you can use to your advantage. Remember, every dollar counts when budgeting.

Shop for deals on Groupon. Groupon has awesome deals – at least 50% off the standard price – on goods, pampering, and local experiences. Providing someone with an experience or service can be cheaper than a traditional gift. Consider shopping for discount massages or tickets to a concert, show, or museum.

Use cashback sites. In addition to shopping during sales, use a cashback rebate site to stack savings … Cashback sites have holiday sales too, including double cashback days, so keep your eyes peeled for additional shopping incentives to sweeten the savings.

Use your credit card reward points. Don’t forget about your credit card rewards. If you aren’t going to redeem your rewards for travel options, tap into your accrued points to score gift cards to stores [where you plan on shopping] or gifts.

Hit the dollar store. Don’t splurge on expensive wrapping paper, cards, or holiday decorations. Visit your local discount dollar stores to purchase decorative holiday items. You will save more money in the long run and your wallet will thank you!

You can also think outside the gift box.

Dash through the snow with unique gift ideas

There are all kinds of alternative ways to get your shopping list handled without expensive purchases. It’s a bit cliché, but it’s the thought that counts.

Amy Maglia, a personal finance consultant with Take Charge America, gave us a list of alternate ideas for gifts:

Make handmade gifts. There’s something meaningful about a gift with a personal touch. Try decorating a picture frame and printing a photo of you and a family member or baking a sweet treat. Pinterest has great ideas for DIY gifts. You’ll save a few bucks and may discover your hidden crafty side!

Give the gift of time. Gifts don’t always have to be material things. Volunteer your time to cook dinner, babysit, or take a loved one on a hike.

Secret Santa. If your family or friends are also on a budget this holiday season, suggest a Secret Santa gift exchange. Each person draws a name and purchases a gift for that person within a set amount of money. This way you’ll all save — and the secrecy adds to the fun!

Check out thrift stores. Gifts don’t have to be brand new to be well received. Thrift stores and antique shops often have unique goods for a fraction of the new cost, and can be a great place to locate hard-to-find items.

Stay disciplined

Once you have a plan, the most important part is sticking to it.

“Prepare yourself for temptation,” Gerstley warns. “With Black Friday, Cyber Monday, and other holiday sales, it is easy to get caught up in the madness. Make a plan and stick with it to avoid impulse purchases and things you don’t need.”

With proper budgeting, saving and deal-finding, you can steer clear of spending that will leave you singing the “holiday shopping debt” blues.

At the end of the day, though, the holiday season isn’t about the gifts. As Potter eloquently states:

“In a snow-globe’s whirlwind of cars with giant red bows on top of them, diamonds expressing Santa’s love for Ms. Clause, and otherwise constant holiday ads, it’s easy to lose sight of the most important part of the holidays. Time spent with loved ones is what the holidays are really about – not diamonds, or phones, or whatever else the TV tells you to buy.”

Get your holiday shopping done as soon as you can, and enjoy the extra time with your family.

From all of us here to you: an early happy holidays!

Article contributors
Ashley Feinstein Gerstley

Ashley Feinstein Gerstley is a money coach and founder of the Fiscal Femme where she demystifies the world of personal finance and money in a fun and accessible way so her clients achieve their financial goals. Follow her @TheFiscalFemme.

Karen Hoxmeier

As a stay-home-mom, Karen Hoxmeier took up couponing and bargain hunting to keep her family’s finances in order. She turned her love of frugal living into a blog in 1999. Over the last 18 years, she has helped her readers save millions of dollars with her tips.

Justin Lavelle

Justin Lavelle is a scams prevention expert and the chief communications officer of BeenVerified, a leading source of online background checks and contact information. It helps people discover, understand, and use public data in their everyday lives. BeenVerified allows individuals to find more information about people, phone numbers, email addresses, and property records. For more information, visit Twitter @BeenVerified.

Amy Maglia

Amy Maliga is a personal finance consultant with Take Charge America , a national nonprofit credit counseling and debt management agency. She specializes in educating consumers about a wide variety of financial lifestyle topics. Visit www.takechargeamerica.org or Twitter @TCAsolutions for more information.

Kendal Perez

Kendal Perez is the savings expert for CouponSherpa.com, a popular source for online, in-store, and grocery coupons. Her money-saving tips are often featured on Bankrate, GOBankingRates, U.S. News & World Report, Wisebread, and more. Kendal can be found on Twitter @HassleFreeSaver.

Sean Potter

Sean Potter is the 20-something writer behind MyMoneyWizard.com, a website where he shares his plans for reaching complete financial independence by his late 30s. His approach to saving more than half of his income has been featured in several publications, including Forbes, Business Insider, and Yahoo Finance. When he’s not writing, Sean can be found cycling, skiing, or traveling the country. Follow him @moneywizardblog.

Natasha Rachel Smith

Natasha Rachel Smith is a personal finance expert at TopCashback.com. Natasha’s background is in retail, banking, personal finance, and consumer empowerment; ranging from sales to journalism, marketing, public relations and spokesperson work during a 17-year career period. She’s originally from London, UK, but moved to Montclair, New Jersey, several years ago to launch and run the American arm of the British-owned TopCashback brand; a global consumer empowerment and money-saving portal company.

Andrew Tavin
Content Manager

Andrew Tavin is a writer, comedian, and a full-time content manager for OppLoans. He graduated with a BFA in TV Writing from Tisch School of the Arts in New York City, worked as a writer for BrainPOP, and created a branded comedy video series for the National Retail Federation called “Interview Day.” He performs around the country and his writing has also appeared on Collegehumor, Funny or Die, and Sparklife.

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