To Unwrap a Budget-Friendly Holiday, Consider These Smart Moves From a Financial Professional

You can avoid a 'holiday hangover' of debt by setting a realistic budget early, making a detailed list, considering alternative gifts, starting to save now and strategically using personal loans or credit card rewards.

By David Kimball

published 18 October 2025

in Features

A woman opens a gift box of cash, only her hands showing. — (Image credit: Getty Images)

As Andy Williams famously sang about the holiday season, "It's the most wonderful time of the year." But the end-of-year period can also wreak havoc on your wallet.

In January, when credit card bills arrive, so do regrets about excessive holiday spending on gifts, parties and more. If you experience this financial holiday hangover, you're not alone.

According to a consumer survey by Experian last year, 63% of those polled admitted to spending too much during the holidays.

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However, by proactively planning now, you can potentially prevent overspending this season.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Here are some tips:

Set a holiday budget early

Before the holiday season gets underway, look at your current financial situation to figure out what you're comfortable spending this year.

You might want to set spending limits based on what was spent in the past, or maybe you want to increase spending.

Whichever you choose, set a number that's realistic and won't put you in a financial bind later.

Remember that holiday expenses can include such things as wrapping paper, shipping, travel and groceries on top of the cost of gifts.

The earlier you make your budget, the longer you'll have to save, and you'll have a clear plan to follow when you shop.

Make a list (and check it twice)

With your budget set, it's time to figure out how you'll spend it. List everyone you plan to purchase gifts for, and how much you wish to spend on each.

Don't forget to include related costs such as ingredients for holiday dinners or new decorations for the front yard.

Conduct a thorough review of your list and expenses. Santa Claus checks his list twice, but it's best to go over yours a few times to make sure nothing is left out, ensure spending expectations are accurate and identify where cuts can be made.

Think about alternative gifts

If your budget requires you to cut back, consider thoughtful substitutes for expensive presents. This can include the gift of your time for babysitting, dog-walking or yardwork.

Drawing names to limit the number of gifts exchanged or contributing to a group gift can also make the holidays more budget-friendly.

Rather than exchanging gifts, you and your loved ones could pool your holiday money to enjoy an experience together, in which you can spend time creating new memories.

Start saving

After setting your budget, start saving to reduce the potential burden later. If you can cut small daily expenses, set aside those savings in a separate holiday account.

Figure out what you can save from each paycheck towards your holiday spending, set up automatic transfers to this account, and watch as your funds grow.

If you have a credit card, look into what rewards it might offer. You could redeem points for cash back, statement credits or discounted gift cards.

Some offer rewards for travel or special promotions for online or in-store purchases at certain retailers. Shopping through your card's portal or pairing deals with store sales lets you "stack" rewards for extra value.

Another saving tip is to reduce social media time to avoid targeted ads that can lead to impulsive purchases.

Strategically use a personal loan

Consolidating debt at any time can help your finances by replacing multiple high-interest payments with one lower-rate personal loan.

This can save money on interest in the long term while usually providing a lower payment now. This means extra cash to put towards your holiday spending.

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A personal loan might also be a good option if you're unable to put money aside ahead of the holidays.

Personal loans often have lower interest rates than credit cards and are paid off on a fixed repayment timeline, which simplifies your budgeting.

Online personal lending platforms help you explore and understand your rate and terms during the prequalification process — all without affecting your credit score.

Above all, if you apply for a personal loan, make sure you understand the repayment terms and that you'll be able to afford the monthly payments.

These are some questions you should consider when applying for a personal loan.

Final thoughts

The Experian survey found that 89% of consumers feel tempted to spend more than they should in the Christmas season, with more than half (55%) of those polled admitting that holiday sales have led to overspending.

The holidays are a joyful occasion and shouldn't be another heavy financial burden.

Taking tangible steps now to plan and ensure you'll be able to pay all your expenses this year can give you peace of mind that you won't suffer that financial holiday hangover come January.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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As Chief Executive Officer of Prosper Marketplace, David oversees the company’s vision, overall operations and performance. David joined the company in March 2016 as Chief Financial Officer and was named CEO in December 2016. David brings more than 20 years of financial management experience to this role. Prior to joining Prosper Marketplace, David served as Senior Financial Officer of USAA’s Chief Operating Office, where he oversaw USAA’s real estate unit, bank, P&C and life insurance companies, investment management company and the call centers/distribution functions.