How to Plan a Holiday Budget

If stores are any indication, it’s not too early to start thinking about the holiday season. I know, I know. It can certainly be surprising (cough cough, annoying) to see Halloween items hit the shelves in August or Christmas items in September, but it’s actually a nice reminder to get a jump on budgeting for those holiday seasons.

Whether your finances are thriving or you’re feeling the pinch, keep reading to see what the average American spends during the holiday season, as well as some tips for keeping your financial waistline from expanding this time of year.

Average holiday budget in America

We Americans love to celebrate. We certainly have plenty of opportunities to partake in the merrymaking. Between various work, family, and friend gatherings, the expenses of traveling, gifts, and food can add up quickly. In 2023, the average American spent $1,000 on Christmas budget items alone.

Make a plan for holiday spending

If holidays bring you joy and you want to make sure you have the finances to cover your expenses, consider the following steps as you prepare.

1. Make a list of “holiday musts.” Maybe that includes a giant skeleton decoration for the front yard (“We can stick a Santa hat on it in December! See? It’s versatile!”), three Thanksgiving and five Christmas family gatherings, a visit to two holiday-themed attractions, and gifts for 11 family members. Whatever your “cannot celebrate the holidays without these” items include, now is the time to identify them. Make a list. Check it twice!

2. Add in the numbers. Once you’ve identified your musts, move on to listing out the expected expenses for each. (Raise your hand if you knew we couldn’t get through this blog post without helping you build a holiday budget.) It’s best to try to have a separate line for each expense involved to make your budget estimating as accurate as possible. Check out the example below to help you get started. Used for example purposes only. Copy and paste this table into your own document to edit it with details that apply to your holiday expenses.

3. Evaluate if any musts can be removed from this year’s list. You don’t have to say goodbye to a beloved holiday tradition forever, but maybe you need to push pause on one or a few this year to make sure you have the funds to cover everything on your list.

4. Find more budget-friendly options. While going all out for everything on your list would be great, if it’s not an option this year, pick one or two things on your list to simplify to help reduce expenses. Maybe instead of funding the entire Thanksgiving meal, ask your guests to each bring a dish and celebrate potluck-style. Just be sure to create of list of what dishes you need and ask people to sign up for one to ensure you have everything covered. Maybe pick names from a hat rather than everyone buying Christmas gifts for everyone. Odds are that many others will be relieved and appreciative that you suggested it.

Anticipate going over budget? We have plans for that, too

If you anticipate your holiday spending will put you over budget, you might benefit from a low-rate credit card, such as Verve’s RateFirst Mastercard®. Our low rates and special introductory offer allow you to pay back your holiday purchases with no interest over the first 12 billing cycles. The RateFirst Mastercard® is a great short-term fix if you’re looking to get over the hump this year and plan better starting next year.

Speaking of next year…

Make saving for next year’s holiday budget easy

If you went through the steps in this blog post, then you have a great start on knowing what you need to plan for future holiday budgets. Consider setting up a Pick Your Payout or Name Your Savings account to help you cover your holiday budget expenses. You can even set up automatic transfers to help you stay on track with your savings goal.

Want more tips for managing your finances? Check out our blog posts to learn more about giving gifts without going into debt, establishing a solid budget or building your savings.