How to Financially Prepare for the Holidays

It’s that time of year again. The holiday decorations have come out and so have the wallets.

You might think that the only way to have successful holidays is to spend copious amounts of money, but this is not so. There are several ways you can financially prep for the holiday season — without feeling like Scrooge — so that you fulfill all your holiday desires without breaking the bank.

Budgeting for Holidays and Spending Habits

The holidays are approaching, so learn how to prep financially for them.

Last year’s expenses

The first order of business is to look at your holiday expenses from last year. This might seem like a pain, but it will be worth it. Did you stay on budget? Or did you end up with holiday debt? According to, key expenditures to go over include cards, postage, food, presents, teacher gifts, special holiday outings and decorations, among others. This way, you can better plan how much you should spend this year.

Lists and budget

Now that you know your tentative allotted spending for this year’s holidays, it’s time to make lists and a specific budget. Write down who gets what this year, and then create a budget for yourself detailing maximum expenses for all possible categories. According to Savvy Sugar, don’t estimate your budget. Instead, stay in control of your budget by avoiding vague estimates.

Spending habits

Cutting back on personal spending habits during the holidays might be the not-so-fun part of the season, but it can certainly save you post-holiday headache. “Think of ways to cut down on your everyday bills now, so you can build up some savings to pay your holiday expenses ahead of time rather than getting stuck with credit-card interest long after the holidays are over,” said Kim Lankford, Kiplinger contributing editor. “Cutting back on lunches and coffee for the month before the holidays can add up quickly — saving just $5 a day can add up to $150 after a month; saving $10 a day can add up to $300. It’s easier to cut back on extras when you know that it’s just a temporary change.”

Lankford also suggests temporarily raising your auto insurance deductible to lower insurance premiums or cutting back on your cell phone usage or cable plan.

Holiday savings account

Sometimes it’s difficult to show restraint if more money is sitting in your checking account. Consider putting some of that cash into a holiday savings account. If your bank offers such an account, it is good for short-term savings, which you can direct toward holiday expenditures, so you don’t overspend.

Credit cards and cash

When it comes to credit cards, the fewer, the merrier. According to, either go the all-cash route or stick to a single credit card for holiday spending. This will help you track your expenses better.

Gerri Detweiler, Director of Credit Education at, agrees: “Use just one credit card to pay for purchases. The average person has several cards in his or her wallet, so sticking to one will allow you to keep a running tally of how much you have spent. Just make sure it’s a card with a generous credit limit so you don’t look like you are using a significant portion of your available credit as that can cause your credit scores to drop.”

Say no to temptations

As you’re preparing your wallet for the holidays, do it and yourself a favor and just say “no” to that $200 pair of jeans that you don’t really need. You might wish you had gotten it for a week, but by the time the holidays are here, you will be thankful you have the extra money to spend on last-minute gifts and food instead of digging into savings.

Unleash your creative side

Last but not least, go the creative route to save money and financially prepare for the holidays. If you don’t absolutely need to buy a gift for someone on your list but you want to give them a little something, consider making them something. As Savvy Sugar says, “It’s the thought that counts.” Homemade treats, wreaths, crafts and other gifts will all be much appreciated.

Photo courtesy of emdot