How to do Christmas shopping on a budget

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The holidays are fast approaching, and for many of us, it’s time to do some Christmas shopping. Consumers will spend an average of $832.84 this holiday season, according to the National Retail Federation. With so much spending on the horizon, it’s easy to lose track of how much money you’re putting into your Christmas shopping — especially when the pressure is mounting.

A recent Bankrate survey found that more than a quarter (27 percent) of holiday shoppers said that their holiday shopping will strain their budgets, and 17 percent feel pressured to spend more than they’re financially comfortable with. And the state of the economy doesn’t help: The same survey found that inflation is changing purchase decisions for 40 percent of holiday shoppers.

It’s easy to feel overwhelmed and guilted into overspending during the holidays, but you don’t have to break the bank buying gifts to make those special holiday moments. Here are some insightful holiday spending statistics and six tips to help you manage your Christmas shopping this holiday season.

Key takeaways

  • Consumers plan to spend an average of $832.84 on holiday gifts and festivities. (National Retail Federation)
  • Of those who plan on holiday shopping this year, 40% say that inflation will impact their shopping decisions (Bankrate)
  • Lower income groups are feeling the effects of inflation at a higher rate— 45 percent of the lowest-income holiday shoppers (under $50,000 in annual household income) say inflation will change how they shop versus just 34 percent who make $100,000 or more. (Bankrate)
  • More than 4 in 5 (84 percent) holiday shoppers plan to employ money-saving tactics this year. Among those who will do so, these tactics include pursuing coupons, sales and discounts (49 percent) and buying fewer items (48 percent). (Bankrate)
  • More than half of shoppers (54 percent) plan to charge at least some of their holiday purchases to credit. (Bankrate)

Save ahead of time

More than 3 in 5 (65 percent) holiday shoppers don’t expect to have money specifically budgeted for holiday expenses, and this lack of preparation can cause financial strain. Saving for a holiday can start well before the Christmas season begins.

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

Another thing you can do ahead of time is to save credit card cash back 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.”

The best credit cards can yield hundreds of dollars in cash back per year — enough to pay for a significant portion of your holiday shopping bill.

Make a budget

You can sock away money throughout the year for holiday gifts, but without a budget for shopping, there’s still a chance that you’ll overspend. Unfortunately, Bankrate’s survey found that over 1 in 4 (27 percent) of holiday shoppers said the shopping will strain their budgets, and, 27 percent plan to take on debt to cover their holiday spending.

To avoid taking on debt, make sure you have a clear understanding of how much you can spend on the holidays, and then 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.”

Looking 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, remember that you don’t have to buy for everyone.

Do your holiday shopping early

Doing your holiday shopping long 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 period, you’ll still be able to take advantage of holiday sales like Black Friday and Cyber Monday, and you’ll also give yourself enough time to shop without feeling the pressure of a time crunch.

“Don’t wait until the last minute,” says Dvorkin. “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.

If you plan to do most of your gift shopping in October and November, you’re in good company. According to Bankrate’s survey, 11 percent of holiday shoppers interviewed in August reported that they had started or would start shopping before the end of August, while 14 percent planned to start in September, 25 percent in October and 38 percent in November. Just 12 percent said they would wait until December to start shopping for the holidays.

Look for discounts and free shipping

If you are sticking to a very tight budget, comparison shopping will be your best friend this holiday season. Compare prices every time you shop with how much the gift costs on other sites. 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 yield big-ticket items at discounted rates. If you are doing part of your shopping online, try to combine purchases and buy on while a free shipping promotion is running. 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.

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.

Look at other holiday gift options

Another way to keep your holiday gift budget in line 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 want to cut back but aren’t keen on eliminating gifts, 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.

Consider 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,” says Hamrick. “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 to friends, traditions and creating memories.”

The bottom line

The holidays can be expensive and there is a lot of pressure to spend, which is why it’s holiday budgeting is so important. Having a roadmap to follow can make it easier to not accidentally overspend and can help keep spending in line when the pressure of the season begins to mount.

Once you’re done budgeting for the holidays, you can strategically plan how much you’ll spend on gifts, food, decor and travel. That way, you end the year on a merry financial note instead of taking on high-interest credit card debt.

Methodology commissioned YouGov Plc to conduct a survey on winter holiday shopping. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,415 adults, including 1,813 winter holiday shoppers. Fieldwork was undertaken between August 17 – 19, 2022. The survey was carried out online and meets rigorous quality standards. It employed a nonprobability-based sample using quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

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