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How to do Christmas shopping on a budget

Happy couple window shopping during the holidays
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The holidays are fast approaching, and for many of us it’s time to do some Christmas shopping. According to the National Retail Federation, consumers will spend an average of $1,047 this holiday season.

The report goes on to say that consumers reported spending in three main categories — gifts for family, friends and co-workers ($658 on average), non-gift holiday items like candy and decorations ($227 on average), and sale purchases ($162 on average). In total, Americans are expected to spend around $720 billion dollars this holiday season.

With so much spending on the horizon, it’s easy to lose track of how much money you’re putting into your Christmas shopping.  In the 2019 Bankrate Holiday Gifting survey, more than 60 percent of people said they felt pressure to overspend on either presents, travel, social outings or charitable donations during the holiday season. And more than 50 percent surveyed said they feel pressure to spend more than they are comfortable with on gifts during the holidays.

We live in a world where social media may have us feeling like we have to meet certain gift giving expectations. But you don’t have to break the bank buying gifts to get those special holiday moments. Here are eight tips to help you manage your Christmas shopping this holiday season.

1. Have a game plan for your holiday shopping

Successful planning for holiday shopping starts well before the Christmas season begins. “Have a separate savings account for the money you’re using to buy your holiday gifts,” Bankrate Senior Reporter Amanda Dixon says. “Start putting money into it in January! The earlier you start, the better.”

Another thing you can do ahead of time is to save cash back rewards throughout the year. Consumer banking reporter Matthew Goldberg advises, “Consider redeeming your cash back earned from your cash-back credit card to help pay for holiday gifts — or at least a portion of your gifts.” If you’re going to earn awards, it might as well go towards something specific, like the family Christmas wish list. And Goldberg adds, “If you’re going to spend this money throughout the year anyway, this can be a nice annual system to provide yourself with a statement credit for the holidays.”

2. Make a budget for your holiday spending

You can put back money throughout the year for holiday gifts, but without a budget, there’s still a chance that you’ll overspend. Once you know how much you have for buying gifts, it’s time to make your Christmas budget. “When establishing your holiday budget, check old credit card and bank statements to see what you spent last year,” says Greg McBride, CFA, Bankrate’s chief financial analyst, “Include everything — gifts, holiday parties, special meals hosted or attended and travel expenses.” Having a look at your past spending will give you an idea of how much to spend this year for each person and for other holiday expenses. And as you make your budget keep in mind that you don’t have to buy for everyone.

3. Holiday shop your home

Before you start making purchases, take a look at what you have at home. Our homes can often be treasure troves of items, many of which we’ve forgotten were there. Look for items that you may be able to re-gift in a meaningful way. Maybe you bought a sweater at a discount that still has the tags and would be perfect for someone on your gift list. Or maybe you have some one of a kind items from your travels that would make good stocking stuffers. Also see if you have any other essential holiday items like wrapping paper, decorations and holiday cards around the house. Using what you already have will help you avoid unnecessary spending on duplicate items.

4. Do your holiday shopping early

Holiday shopping before Christmas week is a great way to avoid stress, crowds and overspending. According to Howard Dvorkin, Chairman of, “The best window for holiday shopping is between October 1 and December 1.” If you do your shopping in this window, you’ll still be able to take advantage of holiday sales like Black Friday and Cyber Monday. You’ll also give yourself enough time to shop without feeling the pressure of the last minute shop. “Don’t wait until the last minute,” Dvorkin says. “Give yourself time to compare prices and find the best deals.” And while other people are scrambling to get their shopping done by the 24th, you’ll be able to attend to other holiday details.

5. Be smart about your Christmas shopping

If you are truly looking to keep your budget intact, comparison shopping will be your best friend this holiday season. “Compare prices every time you shop with how much the gift costs on Amazon,” Dixon advises. “That way, you’re not getting ripped off or spending more than you need to.” Another thing to do as you shop is to make sure you ask for discounts that may apply to you. Sometimes stores will run promotions for new shoppers. They may also offer discounts for teachers, students, veterans, or senior citizens. You won’t know unless you ask.

It goes without saying that being a smart shopper also means taking advantage of holiday deals. Black Friday, Cyber Monday, and Christmas Eve sales can give you the chance to buy big ticket items at discounted rates. If you are doing part of your shopping online, try to combine purchases and buy on free shipping day. Free shipping day is an annual event that occurs mid-December (this year it falls on December 14) where you can shop with participating large and small retailers that offer free shipping and guaranteed delivery by Christmas. You can check the website for participating stores.

Just make sure you go into these sale days armed with a list. Only buy something if you have a specific person in mind. Avoid impulse buys and don’t be seduced by holiday sales pitches. Stick to the list.

6. Stick to your Christmas budget

Let your budget be the blueprint for all of the purchases you make. As you do your holiday shopping, make sure you track your spending. You can use a spending tracking app to help with that. As you Christmas shop, prioritize your list and avoid making spur of the moment purchases. If you feel pressure to buy for more people than you have on your list, maybe part of your budgeting can include letting others know that you are on a budget this year.

Another way to resist the temptation to go over your holiday budget is to limit your card access. Only take one or two cards and be strategic about which ones you choose. And if all else fails, you can go back to basics and just pay with cash. “Cash makes it easier to stick to your budget,” says Joseph Montanaro, a certified financial planner who works for USAA. Take out only the amount you have allocated for your holiday shopping and go from there.

7. Look at other holiday gift options

Another way to keep your holiday gift budget in check is to look at different ways to gift. For starters, you could set a spending limit for everyone giving gifts this Christmas. If everyone is spending the same amount, you avoid the possibility of anyone feeling like their gift is worth too little or too much. You can also limit who is involved in the gift giving. “Limit gift exchanges to immediate family members,” says Mark Hamrick, Bankrate senior economic analyst. “Even then, make sure that all potential targets for gifts in your family actually want to continue to exchange items. Some might want to forgo the process. The thoughtful sharing of your personal time could well be more valuable than ‘things’ to some.”

If you aren’t keen on eliminating gift giving, but want to cut back even more, buy group gifts. This means that instead of buying a gift for each person in your family, you buy one gift that the whole family can enjoy. This could be a game, tickets to an amusement park, or a new television. Think of something in your home that everyone has wanted to get or to upgrade, and look for a good deal on that thing.

8. Spread holiday cheer with homemade gifts and experiences

Buying the things on your loved ones’ wish lists may make an impression in the short term, but often those gifts are forgotten in the long term. “Homemade gifts, potentially less expensive than those bought in store, can generate every bit as much gratitude, or even more so,” Hamrick says. “People appreciate the time, thought and effort that goes into making them.” Start a holiday tradition that you and your loved ones can enjoy every year. These experiences usually don’t cost anything but time. However, what they give in memorable moments is priceless. “Downsize holiday spending, not your holiday joy,” says Mari Adam, a certified financial planner. “Limit the size of your Christmas in terms of gifts, and make it big on meaning — from family, friends, traditions to creating memories.”