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Avoid Overspending During the Holidays

It's a cruel truth of monetary timing that the holidays fall at the end of the year—just in time to torpedo your annual budget. Family parties, gifts for your kids' teachers and seemingly endless shopping can result in huge bills. But careful strategizing can keep your spending out of the stratosphere. Here, the experts weigh in on common snafus, what to do about them and how to get ahead in the new year.
Woman shopping at Holiday Sales
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Illustrations by Nick Cocotos

Mistake 1: Waiting until the last minute. Sprint around the mall in a procrastinator's panic and you'll spend twice as much as you intended. Think of early as the new black: Retailers want to be the first to get your money, and hitting those November sales means no springing for express shipping.

Mistake 2: Paying with plastic. People spend more when they use credit cards than when they're purchasing with cash. "You can't screw up if you only withdraw the amount you have available," says Mary Hunt, author of Debt-Proof the Holidays (DPL Press).

Mistake 3: NOT searching for coupon codes. Online shopping is great, but look for promotional codes before clicking "buy." Type a site's name and "coupon code" or "promo code" into a search engine. and, for example, list deals on free shipping and discounts. Also consider using cash-back portals such as or, which reward you for ordering from certain stores, says Kelly Hancock, author of Saving Savvy (Worthy).

Mistake 4: Forgoing a list or budget. Heading to the mall without a list of giftees or a spending limit tempts budget-busting fate—it's too easy to grab just one more thing. Set a maximum amount per person or an overall budget for everyone, then stick to it. That includes stocking stuffers, so don't get waylaid by cutesy items near the checkout, says Hancock. Remember to factor in shipping costs if you're mailing gifts.

Mistake 5: Spending the same on each kid. Troubled by the thought of seeming to favor one sibling over another? Don't be. "Explain to your kids that they get what they need most," says Megan Poore, a financial planner in Austin, Texas. "And if what they need now happens to be more or less expensive than what their sibling needs, that's okay." Then resist rounding out your list with meaningless tchotchkes to make up a small difference.

Mistake 6: Purchasing individual items. "Choosing gifts one by one is more time-consuming and expensive than buying sets that can be divided," says Stephanie Ann, author of The Cheap Diva's Guide to Frugal and Fabulous Living ( Buy a collection of ceramic bowls and fill them with baked goods, for example, or pick up a set of candles to split among your kids' teachers. Use mugs to package tea, cocoa or ground coffee. Wine is also available (and discounted) by the case—and makes a nice hostess gift.

Mistake 7: Buying all your presents. A handmade treat lets the recipient know you thought of her, and it usually costs less than something from a store. Consider giving homemade granola, a tin of cookies or spiced pumpkin bread. "In surveys we ask people if they prefer purchased gifts or something homemade, and homemade always comes out ahead," Hunt says.

Mistake 8: Overlooking entertaining costs. If you throw an annual holiday party, stock up on the basics early. Watch for sales on items you can freeze or keep in your pantry, such as canned pumpkin, frozen rolls and meat. "I always serve pork tenderloin over the holidays," Hancock says. "So by November, I'm already looking for specials." Also consider borrowing holiday-themed decor. "You don't need a matching set of everything," says Lisa Reynolds of the savings site "If you have 10 reindeer plates and your friend has 10 snowflake plates, you're all set."