Updated November 30, 2024

I love the holidays. I love Christmas shopping and gathering with friends and family. And I love the energy and the lights and decorations around town. I even like the snow! I admit it: I’m as enthusiastic about the holidays as Clark Griswold in National Lampoon’s Christmas Vacation.

The holidays are a wonderful time of year, and making them special for your family is important. For those of us with kids, this feeling is even stronger—we want to create magical moments they’ll treasure forever. However, the season also comes with its challenges, particularly the financial pressure and stress that often accompanies it.

The National Retail Federation projects retail sales to reach at least $5.23 trillion in 2024. According to their recent survey, “consumer spending on the winter holidays is expected to reach a record $902 per person on average across gifts, food, decorations and other seasonal items.” Without proper planning, it’s easy to overspend—sometimes far more than intended or financially advisable.

Planning for your expenses is important. Here are four simple rules to follow to make sure you don’t overextend your finances and manage the financial stress this holiday season:

1. Identify all of your holiday costs

When it comes to holiday spending, gifts are usually the first thing that comes to mind. But they’re far from the only expense. What about new decorations, wrapping paper, potlucks, and Secret Santa exchanges at work? Reunions with friends, travel, hosting holiday dinners or parties? Even grabbing a meal while shopping can quickly add up. Without planning for all these expenses, it’s easy to be caught off guard and overspend.

2. Plan your holiday budget and stick to it

Once you’ve identified all of the potential expenses, you can then prioritize how you will spend your money. When you’re doing this, you may come to realize that you might not be able to do it all. But you can decide what’s really important to you and prioritize these things. This way, you won’t miss out on your favorite parts of the holiday season for financial reasons.

There are two advantages to having a budget. The first is obvious: You won’t overspend. The second is the comfort you get from knowing that when you’re out shopping and having a good time everything you’re spending on has been accounted for. With a budget, you avoid the constant worry of, “Can I afford this?”

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3. Don’t go into debt for the holidays

Be careful using a credit card. It’s easy to lose track of how much you spend when you’re not using cash. It might seem harmless in the middle of holiday fun, but January will come… and so will the credit card bill. If you don’t have the money to pay off your balance in full, you’ll end up paying interest. And all the gifts and other holiday purchases will cost you more than what you originally paid. If you’re already in debt, you’ll just add to your troubles.

I can’t stress this one enough. If you know my personal story, you know I’ve been there. Once you get into debt you can’t handle, it snowballs. Going into credit card debt over the holidays is just not worth it. I’m sure your friends and family don’t want you to do it either.

4. Keep it simple

The holidays shouldn’t cause financial stress. Some of the best gifts are the personalized ones that no one else can offer.

My wife and I don’t spend a lot of money on each other. Instead, the best gift we can offer each other is a commitment to set aside time in our busy lives to spend together. We want our two young girls’ Christmas to be special, and we have found that this doesn’t require spending hundreds of dollars on toys that they’ll lose interest in within a year. They’re already looking forward to decorating the Christmas tree, baking cookies, and having hot chocolate by the fire. We hope these simple family traditions will be what our kids remember the most.

The New Year is approaching fast. It’s a great time to get ahead on your financial goals. Don’t let overspending this holiday season put you behind.

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