While making holiday travel plans, hosting gatherings, and shopping for loved ones can be exciting, you could throw your budget out of whack if you aren’t careful. According to PwC’s 2026 Holiday Outlook, holiday shoppers plan to spend an average of $708 on gifts alone this year. So, if you want to start off 2027 debt-free, consider these six strategies to keep your holiday spending in check.
9 effective holiday savings tips to try
Ideally, the key to ensuring your holiday spending doesn’t make a massive dent in your budget is to factor it into your budget throughout the year. However, if you haven’t been saving for the holidays, you can still be strategic about spending and saving money now.
1. Set a spending limit — and stick to it
Decide how much you can afford to spend in each category — whether that’s $30 per gift or $300 total for travel — and commit to staying within those limits. This discipline helps you filter out impulse buys that can derail your budget.
“It’s easy to get caught up in the spirit of giving, but setting a spending limit can make the holidays far more enjoyable,” said Casey Brueske, community education development specialist at PenAir Credit Union. “When you build your budget, take stock of who you plan to get gifts for and how much you’re comfortable spending on them, all the gatherings, and travel, then break it down by category. Don’t forget to include all the little extras like decorations, holiday cards, and last-minute stocking stuffers.”
2. Use a sinking fund
A sinking fund is a savings account meant for a planned future expense that doesn’t fit into your regular monthly budget, such as a vacation, home down payment, or holiday shopping.
By setting aside a bit of money on a consistent basis, you can spread out the expense and avoid taking on new debt or scrambling for funds when you need them. And there is still some time between now and the height of the holiday season you can use to build up savings for holiday expenses such as gifts, parties, decorations, and more.
Review your budget to see how much you can comfortably afford to set aside each time you get paid. You may also want to revisit your current savings goals and see if you can adjust your savings account contributions to prioritize holiday savings until the end of the year.
You can supercharge your savings by putting your holiday sinking fund in a high-yield savings account (HYSA) with a competitive interest rate. Some of the best HYSAs currently earn over 4% APY, meaning your balance will earn interest and continue to grow without any extra work on your part.
3. Take advantage of holiday savings accounts
Some banks and credit unions offer accounts specifically designed for holiday savings.
For the most part, they are similar to traditional savings accounts. However, holiday savings accounts may come with lower fees or higher interest rates to encourage saving.
Keep in mind, though, that there may be minimum balance requirements or penalties for withdrawing money before the holidays. If you’d prefer a savings account with fewer restrictions, you can also consider a high-yield savings account, which pays above-average interest and can be accessed year-round.
4. Start your shopping early
Who says you have to wait until December to buy gifts? Start shopping early so you have time to compare prices, find sales, and use discount codes — ensuring you get the best deal on everything you need.
Brueske also suggested researching which retailers offer holiday price-match guarantees, which ensures you don’t get stuck paying a higher price than necessary. “Dates and policies can vary from company to company, so it’s important to review any exclusions before attempting to make a claim,” she said.
5. Leverage cash back
If you have a rewards credit card, now is a good time to review your rewards balance. See if you have enough points or cash back to redeem for gift cards or a statement credit (or even rewards miles for upcoming travel) to offset holiday costs.
It also pays to be strategic about how you use your rewards card over the next couple of months. For example, if your card offers rotating categories that earn a higher rewards rate, choose one that aligns with your holiday spending plans, such as department stores or restaurants. Of course, if you do put holiday expenses on a card, be sure to stick with your budget so you can pay off the full balance each month. Otherwise, interest charges will wipe out your rewards, and then some.
But even if you don’t have a credit card — or don’t want to use one — you can still earn cash back on your holiday spending. Cash back browser extensions such as Rakuten, Honey, and Capital One Shopping award cash back on purchases made at popular retailers, regardless of the payment method used. Plus, they can also automatically search for and apply coupons when you shop online.
6. Don’t discount a homemade gift or a gift exchange
Ultimately, the holidays aren’t about overspending or buying luxury gifts for everyone on your list. Opting for a homemade gift can be a more intentional, heartfelt, and affordable way to show your loved ones that you’re thinking of them this season. Think: Baked goods, handmade ornaments, or even handwritten letters.
Another option is to set up a gift exchange with your friends and family. If you have a larger family or friend group, buying an individual gift for every person on that list can significantly dent your budget. If you can coordinate a gift exchange, it will save you money, and you’ll be able to put more time and thought into the perfect gift for whomever you’re shopping for.
7. Plan ahead for holiday meals
If you’re hosting a party or holiday dinner, pre-planning can help you manage the costs. Buying items in bulk, purchasing non-perishables ahead of time when there’s a good sale, and spending some time searching for coupons can help you keep costs low.
Another creative way to save time and money on holiday meals is to host a potluck dinner. Reach out to your guests and see if everyone can commit to bringing one dish with them to your event. That way, you can save money on groceries — and avoid the headache involved with cooking multiple dishes.
8. Give your budget some breathing room with a seasonal side gig
If you have the time and energy, taking on a temporary part-time job or seasonal side gig can help you earn some extra cash and offset holiday expenses. Consider picking up a few shifts at your favorite store, delivering groceries, or selling handmade goods to friends and family.
9. Open a credit card with a 0% introductory APR
These days, many Americans are struggling to pay for even their most basic living expenses. Although relying on credit cards when money is tight is rarely advised, the truth is that sometimes, it’s necessary.
However, you can use credit responsibly this holiday season, even if you need to carry a balance for a few months. The key is to choose a card with an introductory 0% APR, which allows new cardholders to avoid interest charges for a limited time.
When you open a 0% APR card, the purchases you make will not accrue interest until the end of the introductory period. Typically, intro periods last anywhere from six to 21 months. After that, your balance begins accruing interest at the standard APR. So, as long as you pay your balance in full by the time your intro period ends, you won’t accumulate any extra debt in the form of interest charges.
It’s important to stress that this strategy should only be used if you have a holiday budget in place and a plan for paying off your balance on time. If you struggle with managing debt or controlling spending, this probably isn’t the best route to take.
Frequently Asked Questions (FAQs)
Ideally, you should start saving at the beginning of the year by setting up a dedicated sinking fund or opening a high-yield savings account (HYSA). Spreading your target holiday budget across 12 months minimizes financial stress. However, if you start later in the year, you can still adjust your monthly budget, trim non-essential spending, or take on a temporary side gig to build up a holiday fund.
A holiday savings account is a specialized account offered by some banks or credit unions designed specifically for seasonal saving, often with lower fees or short-term incentive rates. However, they may carry withdrawal penalties before the holidays. An HYSA is a traditional savings account offering consistently high interest rates year-round with greater flexibility, allowing you to deposit and withdraw funds whenever needed without penalties.
To avoid holiday debt while using credit cards:
Leverage Cash Back & Points: Redeem accumulated reward points for statement credits, gift cards, or travel.
Pay Balances in Full: Always pay off your monthly balance to avoid interest charges that wipe out your rewards.
Consider a 0% Intro APR Card: If you need to spread payments over a few months, use a card with a 0% introductory APR period, and ensure you have a strict plan to pay off the balance before the promotional period ends.
You can keep holiday meal costs manageable by planning your menu well in advance, buying non-perishable ingredients in bulk when they go on sale, and using digital coupons. Another effective approach is hosting a potluck dinner where each guest brings a specific dish, side, or dessert, sharing both the cost and effort.
Consider thoughtful alternatives like making homemade gifts (e.g., baked goods, handcrafted ornaments, personalized photo frames, or heartfelt letters). You can also coordinate a Secret Santa or gift exchange with family and friends, allowing everyone to buy just one meaningful gift within a set budget rather than purchasing individual items for every person.
Suresh holds a Master of Commerce (M.Com) degree and is a dedicated personal finance researcher and writer. Combining his advanced academic background in commerce with deep industry research, he covers complex topics like taxation, banking systems, credit analysis, and personal finance strategies. As the founder of Tax Assistant (taxassistant.org), Suresh is committed to translating complicated financial guidelines and economic data into simple, accurate, and actionable educational resources for everyday readers.
