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10 ways to save money during the holidays

Two young brothers bake cookies together.
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It’s easy to get caught up in the holiday spirit and overspend. But the thrill of giving nice gifts and hosting big parties is fleeting compared with the stress that comes later, when you have to pay for it all.

By planning ahead, saving money and sticking to a budget, you can avoid debt and keep your spirits up long after the holiday lights go out.

Here are 10 ways to save money during the holidays.

1. Set up a holiday budget

If you want to keep a tight rein on your spending this holiday season, the first step is to create a budget and stick to it.

Some savvy consumers start saving early for the holiday season by taking advantage of old-fashioned Christmas Club accounts at a bank or credit union, or by opening a short-term certificate of deposit.

Plan how much you can spend on gifts, decorations, food, travel and all other holiday-related expenses. And don’t forget little things, like holiday cards and stamps.

Add a little extra for unplanned purchases you can’t pass up so they don’t ruin your budget.

2. Make a shopping list (and stick to it)

After you’ve set your holiday budget, make a list of all the people you want to buy gifts for: Focus on how much you can spend on each one, not on what you want to buy.

If the list is too long for your budget, go through it again, and pare names or spending amounts. One of the easiest ways to trim your budget is by trimming the list of people you’re shopping for.

You and your friends may agree to not exchange gifts, especially if you’re facing job loss or other hardship.

3. Add your name to the gift list

This might sound selfish, but it’s psychologically effective: Add your name to the gift list.

Sometimes, you buy something for someone that you like so much, you wish you had kept it. The best antidote for that is to allow a little extravagance for yourself — especially if it’s on sale.

4. Go with Secret Santa, potlucks and e-cards

If you have a large family, buying gifts and cooking for everyone can force you to spend more than you can afford and take the joy out of giving.

A fun, easy way to get around that is to plan what is commonly called a Secret Santa gift exchange. Everyone draws a name without telling who it is and buys just for that person. Usually, there is a moderate spending limit imposed, and the element of surprise at gift-exchange time adds to the fun.

Or, get with relatives and make a list that covers the entire family but doesn’t leave anyone feeling like they have to shop for every niece and nephew.

For holiday meals, plan potlucks. By having everyone contribute, you will save a lot of money and gobs of time and energy.

E-cards are another way to save money and time. Rather than buying holiday cards and paying for postage for each one, find some nice e-cards online. They’re a free or fairly inexpensive way to send a holiday “hello” to far-flung family and friends. If you have an artistic flair, you can create your own holiday cards.

5. Pay cash

One way to avoid holiday debt is to pay cash for everything. Once your holiday budget is finalized, take that amount of money out of the bank and stick to your spending plan.

Once that money is gone, you’re done shopping.

Of course, you can’t use cash for shopping online. In that case, use a prepaid card. You can buy prepaid cards at Walmart, convenience stores and many other retail outlets.

Prepaid cards limit your spending to the amount that is loaded onto the card. If the card is loaded with $500, that’s all you can spend.

Prepaid cards are a great tool for tracking and limiting your spending. Just be careful of reload fees and other charges.

6. Be cautious with credit cards

Today’s best credit cards are handy financial tools, but they can be dangerous at Christmastime. Some credit card customers end up with holiday debt that lasts a long time.

“Shoppers can lose their sense of financial responsibility when it comes to using their credit cards,” says John Ulzheimer, a consumer credit expert, author and educator. “Certainly there is nothing wrong with using credit cards for your holiday shopping, just as long as you spend within your means and can pay off any balances with relative ease.”

Always use the card that offers the lowest interest rate. It’s also a good idea to track your credit card spending.

“The safe bet when it comes to holidays and plastic is to use your credit cards for the things you would have paid cash for and then pay off the balances as soon as possible when your statement shows up,” Ulzheimer says.

7. Give the gift of your time

If you want to give someone a gift but can’t afford to buy anything, consider giving the gift of your time. You could baby-sit or walk the dog for a friend with an overloaded schedule.

An elderly relative might appreciate someone to run errands, do housework or take them to an appointment or out for a meal.

Handmade gifts are nice, too. If you’re already baking cookies for your family, making an extra batch for someone on your list is pretty cheap.

8. Thoughtful gifts outshine expensive ones

Some people are hard to buy for. They’ve reached a point where they have everything they need, which gives you an opportunity to be creative and come up with a thoughtful, simple gift that is also inexpensive.

It could be a framed photo of a special memory, an engraved letter opener, tickets for an event or show, a decorative pillow or something beautiful from a local antique mart or flea market.

9. Take advantage of Free Shipping Day

Free Shipping Day is Dec. 14 this year. Hundreds of stores offer free shipping with no minimum order, plus other special deals.

If you’re planning to buy most or all of your gifts online, buying them online on Free Shipping Day can save you lots of money. Visit the Free Shipping Day website to see the complete list of participating companies.

10. Use apps that can save you money

Take advantage of technology this holiday shopping season and use one of the many budgeting and money-saving apps.

You can use apps like RetailMeNot, Honey and Rakuten to get cash-back deals and discounts automatically when you shop online.

Just be aware of items that may seem like a bargain but really aren’t. Some doorbusters or other sales are designed to get customers to spend. Be sure to check prices using your phone or computer to make sure you’re really getting a bargain?

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Written by
Libby Wells
Contributing writer
Libby Wells covers banking and deposit products. She has more than 30 years’ experience as a writer and editor for newspapers, magazines and online publications.
Edited by
Vice president