If you’re like me, watching your loved ones open the gifts you bought is just as fun as getting presents yourself. According to the National Retail Federation, however, consumers are planning to spend a whopping average of $935.58 this holiday season. That’s a lot of money, and many of those people surveyed will inevitably go over budget, too. While the holidays are certainly a time for celebration and fun, nothing says “happy new year!” like entering January with no debt, no fees, and no interest to pay.

Luckily, overspending doesn’t have to be a holiday tradition. If you plan ahead and employ a little discipline, you can have a wonderful season and give generously without waking up with a financial headache on the 1st.


Make a Budget

No really — get a piece of paper (or an app, more on that later) and actually write it out. Set aside some time to sit down and make a comprehensive list of every holiday expense you expect. That means every person on your gift list, festive decorations for the house, a new outfit for that Christmas party, wrapping paper and cards, a grocery list that includes the family feast and several dozen cookies. Everything.

Next, go through and assign a concrete dollar amount to each item, and each person. You’ll probably have to brainstorm an item for every gift you’ll need to buy and do a quick Google search to get a sense of the price range. Make sure you aren’t leaving anything out with this holiday spending calculator.

When you have the numbers, add up the grand total and see how it compares to what you can actually afford to spend. You may well have to make some cuts — which is exactly why you’re doing it now instead of after the cash has changed hands! It’s time to be a little ruthless. Scratch off that random person you don’t know very well, scale down your decorations, and pick some cheaper options for the people who aren’t as close to you.


Get Creative

If you don’t want to pare down your giftees too much, don’t be too quick to dismiss alternative ways to give. Not everyone is crafty — including myself — but quick and thoughtful homemade gifts go a long way.  If you’re like me, it can turn into a fun activity with your spouse, family or friends; even if your job ends up being schlepping all the crafty items from the basement up the stairs.

Whether it’s a thoughtful and meaningful handcrafted masterpiece for someone very special, or a “mass produced” gesture for those on the fringes of your list, you don’t always have to spend big to give well. Cookies are never poorly received (you can even skip the labor of cooking and just share the mix!), and a jar of salsa made from your grandmother’s recipe is much more personal than a gift card. If you can’t cook, well, someone’s gotta be the packer and cleaner-upper, right? For the people on your list who you don’t know very well, like coworkers, this personalized touch can actually do more to show your appreciation, while simultaneously saving you time and money.


Keep Yourself Honest

In order for the budget to work, of course, you actually have to stick to it. One great way to keep yourself on track is to deal only in cash for your holiday shopping. The old fashioned envelope system was popular for a reason. Try separating out your budget for each person into different stashes (paper clips and post its will work just fine if you don’t actually want to stuff envelopes) and limit yourself  to only spending that amount of cash for each. When the money runs out, you’re finished shopping, period.

Psychologically, dealing in cash is a good way to keep yourself within your budget, because having to fork over physical money with each purchase hurts us a little bit, and provides a very concrete sense of exactly how much you’re spending. Watching that wad of money dwindle is a good way to keep yourself motivated.

If cash and envelopes are just too old school for you, consider downloading a good budgeting tool to keep you on track.  

It’s not enough to simply have a budget; you also need to use it. And because holiday spending can add up so quickly, you need to be tracking your money in the moment. Apps like Goodbudget mimic the old envelope system digitally and can be used all year round. There are also holiday-specific apps, like Santa’s Bag, Gift Plan, and No More Socks.

Ta-da! I won’t say it’s easy, but it’s certainly possible to get through the holidays with a happy list of family and friends and a happy wallet.