Four Holiday Shopping Strategies to Keep You in Check

Overspending during the holidays is so easy, but if you go into the shopping season with a plan and a budget, you’ll be so much happier in 2024.

Holiday presents and Christmas tree ornaments are artfully arranged.
(Image credit: Getty Images)

Although many people’s finances are in a better position today than they were a year or two ago, this holiday season could still be tough. Holiday shopping can be expensive, especially if you have a lot of people to shop for.

If you’re not careful, your generous gift giving could be harmful to your finances. Given inflation and high interest rates, it’s important to have a plan in place before you head out to the stores to buy presents. Here are four strategies to consider for your holiday spending.

1. Have a budget and a plan.

To avoid problems in a year filled with inflation issues, you first and foremost need a spending plan. Take a closer look at your finances and determine how much you are comfortable spending this holiday season.

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Sticking to a budget or spending plan will help you avoid falling into credit card debt or dipping into your savings to pay for gifts. If possible, I recommend creating a separate account that is dedicated to holiday spending. This will allow you to build holiday savings without harming your ability to pay for everyday expenses.

The more detailed your plan is, the better. Make a list of every person you need to buy for, what you want to buy for them and how much each item will cost. If you can, start shopping early. This will give you more time to spread out your spending and keep tabs on any items that may go on sale to save yourself money. Last-minute shopping is the easiest way to overspend and drain your finances.

2. Pay down debt.

Over the past few years, many of us have turned to our credit cards to cover everyday purchases, leading to sky-high credit card debt. Americans currently hold more than $1 trillion in credit card debt. Don't add to an already high credit card bill by breaking the bank with your holiday shopping.

Having a plan in place and starting early should include paying down debt where you can. First, get organized. It’s hard to tackle your debt if you’re unsure of what you owe. Take inventory of every credit card and figure out how much you owe on each. Once you know what you owe, make a plan for paying it off. 

The avalanche method is all about tackling the debt with the highest interest rate first, and the snowball method focuses on paying off the credit card with the smallest balance first. Whichever method you choose, make sure you are paying more than the minimum and using any additional money to pay down other debts.

3. Use cash.

One of the best approaches to holiday shopping is to use cash instead of credit cards. You’re not adding any additional debt to your credit cards when you choose not to use them. 

Once you know how much you're willing to spend on gifts, withdraw that amount from your bank account. As soon as you run out of cash, that's it! No more spending. This will ensure you don't bust your budget while holiday shopping.

4. Take care of yourself.

When you sit down to create your holiday spending plan, don’t forget about yourself. I don’t mean buying yourself an expensive holiday present like a new TV or smartwatch. I do mean continuing to put money toward your retirement.

Don’t stop planning for your own financial future just to spend money on holiday shopping. Keep putting money away in your retirement accounts, like a 401(k) or an IRA. I recommend my clients put away 10% to 15% of every paycheck, and that shouldn’t stop during the holidays.

The easiest way to ensure you’re not forgetting about your own finances is to put them on autopilot. By setting up automatic contributions, you avoid the temptation to spend that money the second you get your paycheck, whether that's on holiday presents or other spur-of-the-moment purchases.

Saving money during the holiday season may feel impossible, especially with inflation and high interest rates, but there are ways to ensure you don’t overspend. A financial adviser can help you create a plan, not only for the holidays but for a great financial future as well. Avoid any undue financial stress in the new year by keeping your holiday spending in check.

Drake & Associates is an independent investment advisory firm registered with the U.S. Securities & Exchange Commission. This is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may view this report. Neither the information nor any opinion expressed it so be construed as solicitation to buy or sell a security of personalized investment, tax, or legal advice. The information cited is believed to be from reliable sources, Drake & Associates assumes no obligation to update this information, or to advise on further development relating to it. Past performance is not indicative of future results.

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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.

Tony Drake, CFP®, Investment Advisor Representative
Founder & CEO, Drake and Associates

Tony Drake is a CERTIFIED FINANCIAL PLANNER™and the founder and CEO of Drake & Associates in Waukesha, Wis. Tony is an Investment Adviser Representative and has helped clients prepare for retirement for more than a decade. He hosts The Retirement Ready Radio Show on WTMJ Radio each week and is featured regularly on TV stations in Milwaukee. Tony is passionate about building strong relationships with his clients so he can help them build a strong plan for their retirement.