How to wrap up the holidays with your savings still intact.

They say that the holiday season is the most wonderful time of the year. But let’s be honest — once the wrapping paper is all cleaned up and the candy cane sugar high you’ve been on since Thanksgiving wears off, you may realize that you racked up some bills that were a little excessive. It can really add up between all of the gifts, travel, food, parties, and other festivities that cause us to spend money. But with a little proactive budgeting and spending control, staying on your financial planner’s “good” list is totally doable.

‘Tis the season…for spending.

According to Bankrate, in 2022, 44% of shoppers said that inflation would change the way they shop. But that hasn’t slowed things down much. In 2023, shoppers are expected to spend an average of $831 during the holiday season. In homes with household income that exceeds $120,000, that number jumps up to $3000. Looking deeper, 27% of shoppers say the holidays will place a strain on their budgets and 65% of shoppers don’t plan to have money set aside or budgeted for holiday shopping. Fortunately, there are a few steps that can be taken to ease the pain.

What is a realistic holiday budget?

It’s a word no one wants to hear, but the most important step you can take going into the holiday season is to have a budget. As a general rule of thumb, many financial planners say you shouldn’t spend more than 4% of your account value on an annual basis. If you take time at the beginning of the year to calculate this number, it can help determine what you have left to spend during the holidays. If you end up exceeding the 4% and your portfolio grew during the year, it may not be an issue. If your account lost value or you just flat-out overspent, you may need to work with a planner early in the next year to create a strategy for replenishing and rebuilding your portfolio. (Your tax refund may be one way to do it.)

If you’re generating income, another way to budget for the holidays is to simply start saving early. If you make a conscious effort at the beginning of the year to set aside a little money every couple of weeks or each month, you’ll know exactly what you’ve got to work with when the holidays roll around. Some people even go as far as opening a separate bank account that is specifically for holiday expenses. That way, the money you have set aside is easier to keep track of (and hopefully less tempting to touch).

Ultimately, the best thing you can do is to meet with your financial planner at the beginning of the year. They can help determine what your spending threshold is so you don’t exceed it—or suggest some other ways to save or set cash aside.

Spend less by shopping smarter.

Implementing a few smart shopping strategies is also a good way to make your dollar go further during the holidays.

Save on shipping: Shopping locally or buying online and picking up in store will save you on shipping.

Let apps do the work: With a little bit of searching, you’ll find a number of reputable apps out there that can find coupons, track prices and search out the best deals.

Sign-up for mailing lists: If you can stomach getting more emails, companies often send discounts, coupons or news about flash sales that will save money.

Save items in your online shopping cart: Throughout the year, placing items in your shopping cart and leaving them there can help save. Many companies will alert you when prices go down from when you originally placed them there.

Use credit cards: Okay, okay… this is not exactly a way to save money. But it is a way to manage your spending. If you can pay off the balance on what you spend in full, using a credit card for holiday purchases is like giving yourself a present in the form of points or cash back.

OR pay with prepaid: Credit cards can be rewarding, but they require discipline and can also make it easy to overspend. Another alternative to help manage spending is by using a prepaid card. That way, once the amount you’ve decided to spend is gone, it’s gone.

Remember, during the holidays, spending goes beyond gifts. You also have to think about travel, parties, food and other events. Take advantage of airline and hotel rates earlier than later. Use credit cards to pay for travel expenses and get rewards. And be sure to save a little for the weekly gingerbread mocha you need to keep your spirits up. That’s important, too.

Budget gift giving: It’s the thought that counts.

Sometimes, the number of friends you think you need to give gifts to is a few too many. You don’t have to buy for everyone. Make a list of the people that really need a gift, and for everyone else, consider a less expensive alternative.

Gift exchanges for groups of friends or co-workers are great ways for people to give gifts without having to give everyone a gift.

Personalized gifts or something homemade can be meaningful and inexpensive. Things like baked goods, homemade ornaments, a framed photo that is meaningful to the recipient, or even a piece of handmade jewelry are all things that can connect on a personal level, but be made inexpensively. Or, if you’ve got expertise or a skill that someone might find valuable, give the gift of your time.

Charitable giving during the holidays.

Charitable giving is common around the holidays, but giving cash is not always the best approach. If you have stock that has appreciated and you have owned it for at least one year, donating it can be a win-win for both you and a charity. They are able to sell it for market value without having to pay capital gains on the appreciation — and you can write the full value of it off on your taxes. Volunteering your time to a charity or non-profit is another great way to give back during the holidays — especially if you are able to involve friends, co-workers, or your family. Consult your tax professional for details.

Is it New Year’s yet?

Hold on to your purse strings, we’re almost there. And if you take a little time to put a plan and budget together, it’s going to be a much less stressful start to the year. Remember, if you overspend, try to replenish those funds as quickly as possible. Don’t forget about end or beginning of the year expenses beyond the holiday that might sneak up on you — like property taxes you might owe, annual subscriptions, insurance payments, etc. And finally, if you feel like you need a little help, reach out to your CommercePremier banker. They can either help, or guide you toward a financial planner who can help you put together a spending plan early in the year. That way, you can plan ahead and know exactly where you stand financially when Santa shows up. Or not (if you were naughty).