Holiday Budgeting: How to Stay in Control and End the Year Strong

The holiday season brings higher spending, more events, and stronger pressure to buy.

Many households head into December without a plan and end up in January with bills they didn’t expect. A practical budget can help you stay in control and protect your finances through the busiest time of the year.

Why Holiday Spending Can Get Expensive

Seasonal promotions, convenience shopping, and social expectations all contribute to overspending. The Federal Reserve’s Consumer Credit Report shows record credit card balances in 2025, and interest rates on revolving credit remain elevated.¹ Carrying holiday purchases into the new year becomes more expensive when interest stays high.

The National Retail Federation continues to report rising year-over-year holiday spending, with many shoppers beginning earlier in the season and extending spending into late December.² Without a plan, December can become the costliest month of the year.

A holiday budget helps restore structure to a time of year when spending can easily accelerate.

Step 1: List Every Expected Cost

A complete list creates the foundation of a holiday budget. Include:

• All gifts
• Travel costs
• Groceries and hosting expenses
• Seasonal activities
• Decorations
• Charitable giving
• Shipping fees
• Gift wrapping and supplies
• Last-minute events

The goal is to remove surprises. Most overspending happens when people forget irregular but predictable costs.

Step 2: Set a Spending Limit You Can Support

Your holiday spending limit should match your financial reality. A clear limit makes it easier to evaluate purchases as the season gets busy.

Step 3: Assign a Budget to Each Category or Person

Allocating a set amount to each gift recipient or expense category keeps spending distributed evenly. It prevents the common pattern of overspending on a few individuals or events late in the season.

Step 4: Identify Spending Triggers During Seasonal Promotions

Late November and December include rotating discounts, limited-time promotions, and extended holiday sales that encourage quick decisions. These cues often lead to purchases that were not planned.

A simple approach reduces that pressure:

• Shop only with a list
• Compare prices before buying
• Ignore countdown timers
• Decline store credit sign-ups
• Pause purchases that were not originally on your list

In general, consumer purchases tend to rise in December regardless of income growth, reflecting both seasonal needs and more impulsive decisions. A list helps keep spending aligned with your plan rather than with retail cues.

Step 5: Choose Your Payment Method

How you pay affects the long-term cost of holiday purchases.

• Paying with cash or debit ensures you stay within your limit.
• Paying with credit requires discipline and a plan to repay the balance in full.
• Carrying balances forward becomes more expensive when interest rates are high. The Federal Reserve reports that average credit card APRs remain elevated in 2025.¹

Some households use a separate holiday savings fund or the envelope method. The approach matters less than your consistency.

Step 6: Explore Lower-Cost Gift Alternatives

Meaningful gifts do not always require large purchases. Consider:

• Experiences
• Handmade items
• Practical services
• Group gifts
• Donations made in a loved one’s name

These options reduce financial strain while still offering value.

Step 7: Check Your Budget Weekly in December

To make sure you’re on target, you should review your budget and adjust it regularly. A weekly check-in keeps your spending aligned with your plan and prevents gradual drift.

Small course-corrections early help avoid larger problems in January.

Step 8: Protect Your January Budget Before the Year Ends

Holiday spending does not end on December 25. Households often face:

• Larger January credit card bills
• Winter utility increases
• Travel expenses that settle after the new year
• Annual subscriptions that renew

A strong start to 2026 depends on the decisions made now.

The Bottom Line

Holiday budgeting is a simple tool to help you stay in control. Clear limits protect your savings, reduce financial stress, and prevent holiday purchases from becoming new-year burdens. A few intentional decisions can support your financial stability long after the season ends.

If you want help building a plan that fits your goals, you can meet with our team. OneDigital’s Financial Academy also offers educational resources designed to support financial clarity year-round.

---

Sources:
1. Federal Reserve. “Consumer Credit – G.19 Report.” https://www.federalreserve.gov/releases/g19/current/
2. National Retail Federation. “Holiday Spending Data.” https://nrf.com/media-center/press-releases/nrf-expects-holiday-sales-to-surpass-1-trillion-for-the-first-time-in-2025

Investment advice offered through OneDigital Investment Advisors LLC.

This material has been prepared for informational and educational purposes only. It is not intended to provide and should not be relied on for tax, legal or accounting advice and are not applicable to any person or organization’s individual circumstances. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Additionally, any statements made reflect our views and/or best estimates, are not intended to guarantee any particular result.

ID: 00395611