The holidays are always such a hectic time, so you want to get ahead of that freight train before it runs you over! Last year, 7 out of 10 Americans reported that they exceeded their holiday budget – many of them by a large amount. And according to Forbes Magazine, about three-quarters will put the holiday on their credit card – a trend that is growing quickly among Gen Z and Millennials.
Start with planning
So, the very first step is to plan what you're going to spend for your holiday. A good rule of thumb is to look at what you spent last year and aim to reduce it by 25%-50%. But it isn't just presents – we need to look at the whole enchilada!
Look at these different categories and try to estimate how much you spend on them in a typical year.
Think through your entire holiday:
Gifts
Parties
Decorations
Holiday meals
Travel
Family Traditions
Workplace/neighbor gifts
Package shipping
Quick introduction
Here's a little snippet to introduce myself and my business at Your Fairy Debtmother.
I’m Adrian Gentilcore and I help people with money. I’m pretty good at it. Been a personal finance blogger since 2007. Also a Financial Analyst for Wells Fargo for 30 years. It’s fair to say, money is my superpower.
As a debt whisperer, I’ve helped hundreds of people manage their budgets and find a way back from crazy debt!
You’re thinking that you make all this money, but you never know where it’s going every month. And the credit card bills are getting scary. I can help you put together a solid action plan you can start TOMORROW to get your money back on track and find your path out of debt.
Preserve the holiday fun
The one thing we don't want to do in this process is to cut out the FUN of the holidays. So take a minute to think back to previous holidays and find the moments that stood out to you. Focus on the fun and warmth of spending time with your family at this special time of year. That doesn’t have to cost a thing.
Some things that you might want to focus on:
Driving around looking at holiday lights
Going on an easy hike together
Playing in the snow (if you have some)
Cooking a meal together from the youngest to the oldest – this will create memories your children can cherish for years to come
Watching special holiday movies all snuggled up in blankets with treats.
How about playing board games together or coming up with silly games like Minute to Win it or fun holiday relays. Maybe a holiday scavenger hunt!
Volunteering as a family would be a nice tradition
Going caroling or bringing cookies to neighbors or shut-ins
Things you might want to eliminate
Fancy light shows you must pay for
Going out to a concert or public performance
Having huge parties with lots of expenses for food and alcohol
Going skiing or snowboarding (very pricey when you can go sledding for free at the local park)
Going to a movie theater (the day after Thanksgiving and Christmas are the biggest movie days of the year – so it's crowded and expensive!)
The biggest expense, of course, is holiday gifts, especially for kids. Yes, it is fun to see their faces light up when they get that coveted cell phone or video game, but those can be real budget-busters, and they suck up a lot of time that could be used for more positive activities.
A new video game can take up to 100 hours to master. That is a huge investment of time that could be spent doing sports, spending time with friends, or doing other things.
Don't miss this insightful video that dives deeper into the topic—click here to watch and gain a new perspective!
What are you teaching your kids during the holidays?
This is also a teaching moment for your children. Are you modeling the financial behaviors you want them to have in their adult lives? If they see you charging up your credit card for expensive gifts you can't pay cash for, that's going to make them want to do the same for their own kids.
But if they see you spending more sensibly, and really taking the time to make thoughtful gifts, or come up with a fun experience-gifts like a trip to the zoo, the aquarium, or even a sleepover for all the cousins, they're likely to understand that Christmas doesn't have to be a huge extravaganza!
Be up front with them, and set expectations, especially if it's going to be a much more low-key Christmas.
Here are some ideas around gifts
Ask your older kids what they really do or don't want and the answers might surprise you. We did away with cheapo stocking stuffers in favor of more useful items like new shoes, books, or clothes for work. Can you encourage a hobby like artwork, music, or pay for a sports camp?
Tracking your spending is a critical step
Now, here comes the tricky part and it's something you probably have never done. Tracking your expenditures. Everything from the decoration to the gifts and cinnamon rolls on Christmas morning.
Because let's face it, you must measure how you're doing, if you're going to know if you're on track with your spending plan. Otherwise, it just fritters itself away, as money often does!
You can do it with a notebook or an app, an Excel sheet, post-it notes, whatever you will actually and consistently use!
those cash envelope schemes are probably the most effective because spending with cash always beats spending with plastic. just fyi, that's why the retailers push you so hard to use credit cards – they know you will spend about 20% more.
But with cash envelopes, if you overspend in one area, you have to borrow the money from another envelope, and that makes it feel very real.
This is true for any type of spending. If you switch to cash, you'll just automatically spend a whole lot less guaranteed!
Let's talk about gift cards
This is an unpopular opinion, but gift cards are a terrible gift choice, and smart people rarely use them. Even if I really want to give a monetary gift, I'd rather just give them some actual CASH rather than a gift card.
Sidebar: My favorite graduation gift is a pretty box filled with hearts made from dollar bills that I made using my questionable origami skills (and YouTube!). It's unique, it's fun, and it's probably less than you'd spend on a gift card. And it's memorable. I’ve never given it to someone who wasn’t THRILLED to get it.
Fun fact: 25% of gift cards never get used. That's why retailers push them so hard. And when people do use them, they nearly always spend more than the card – so you're actually giving them debt!
Also, they aren't memorable. What’s the last thing you bought with a gift card? Does it make you remember the giver? Probably not.
Start a holiday savings plan
Here's a secret – we'll have Christmas (or whatever holiday you celebrate) again next year. Why not get ahead of the game by setting up a holiday savings account. I've done this for the last 8-10 years and it works beautifully.
I have a separate savings account, with automatic transfers to it – I do $100 per month. That gives me $1200 free and clear to spend on whatever I like for the holidays. Some years, I spend a bit more, so I might have a small credit card bill for january, but it's a ton less than most of you are going to see in your mailbox!
Try it for 2025 and see how it goes.
What to do now?
I'm glad you asked, because I'm going to tell you. I've got 3 sons, so I have a Master’s Degree in holding people accountable (like most Moms!). So, let's sit down and make a written plan for your upcoming holiday.
How much do you think you spent last year? Shave off 25%-50% to get your baseline budget.
When are you going to make your plan? Today? Tomorrow? Pick a date.
How are you going to do it? Paper or electronic – pick one.
Where are you going to keep it, so you don't get busy and forget about it? I like to put things on the fridge, or the bathroom mirror, or even inside a cabinet door. If you see it often, you'll pay more attention to it.
Track your spending. Again, how are you going to do it? Do you need to find a spare notebook? Build an Excel sheet, download an app? Chop, chop. Let's do this!
Hope you found this helpful
If you found this helpful, come visit me at YourFairyDebtmother.com to learn more about all the resources I have to offer. I've been a personal finance blogger since 2007, so you bet I've got a ton of great info to share with you.
I also do debt-free personalized coaching that is quick, easy, and affordable for every budget, so I'd love to help you with both your debt and your monthly budget.
Read more from Adrian Gentilcore
Adrian Gentilcore, Special Guest Writer and Executive Contributor
Adrian Gentilcore is a seasoned entrepreneur with a 40-year career in Corporate America and a proven track record of creating successful online businesses. Now a full-time freelancer, she operates two distinct brands: Your Fairy Techmother, where she specializes as a LinkedIn Trainer, Email Marketer, and Web Designer, and Your Fairy Debtmother, where she offers her expertise as a Debt-Free Coach and popular Personal Finance Blogger. In her 60s, Adrian continues to run her businesses alongside her 75-year-old sister, together coining the term seniorpreneur to capture the spirit of their dynamic partnership.
