It’s easy to get swept up in the excitement of holiday shopping. One sale leads to another, a “quick gift” turns into three, and before you know it, January arrives with a much bigger bill than you expected. The key to avoiding that annual financial hangover? Prepare before you start shopping.
A 2025 AICPA holiday spending survey conducted by the Harris Poll shows just how critical that preparation is. Among those planning to buy gifts or travel, 25% say they usually make a budget but probably won’t stick to it—and younger shoppers struggle the most, with 33% of adults 18–34 admitting they often abandon their budget. Add in the fact that 47% expect to take on holiday debt, and setting a plan before the first purchase becomes more important than ever.
Avoid the Hidden Traps of Holiday Shopping
A few predictable culprits tend to derail even the most well-meaning budget:
Emotional spending. Holiday shopping hits our nostalgia, generosity, and “treat yourself” impulses all at once. That combo is tough to resist.
The pressure to create the “perfect holiday.” From matching pajamas to elaborate meals, social media has elevated expectations and spending across the board.
Price increases. Don’t base your spending budget on last year’s spend. It’s very likely that it’s going to cost more this year.
Buy Now, Pay Later temptation. With 36% of those expecting debt planning to use Buy-Now-Pay-Later services like Klarna or Affirm, it’s easy to spend more than you intended without feeling the impact right away. Use these services cautiously if you must and pay attention to the fees.
With a little structure and awareness, you can enjoy the holidays and stay financially grounded. Here are a few smart, CPA-approved strategies:
1. Create a Holiday Spending Plan Before you browse, click, or buy, map out your full holiday budget. Break it into clear categories, such as:
· Gifts
· Travel
· Meals and entertainment
· Décor
· Shipping
· Charitable giving
· Pet care or babysitting
Set a cap for each category—and stick to it. Many shoppers only budget for gifts, but holiday spending stretches much farther than what goes under the tree. Avoid impulse buys. If it wasn’t on your list, pause. Step away for 24 hours before deciding.
2. Anticipate Hidden Costs Holiday budgets unravel when surprise expenses show up.
Common oversights include:
· Holiday meals and ingredients
· Taking visiting friends/relatives out for dinner
· Airport parking, gas, or rideshares
· Gift wrap and shipping
· Extra childcare or pet care
· Tipping seasonal staff or service providers
Don’t forget that holiday and non-holiday bills can hit at the same time. Heating costs climb in December and January, and many homeowners face property tax deadlines during those months. Small changes like lowering your thermostat when you’re asleep or away and switching to energy-efficient lighting can help offset those seasonal costs.
3. Automate Your Savings Before Temptation Kicks In If you’re lucky enough to receive a bonus, tax refund, or other windfall during the year, allocate part of it for holiday spending before the spending season starts.
Automation protects that money from impulse decisions. You can designate it for:
· Emergency savings
· Debt repayment
· A dedicated holiday fund for next year
Future you will be grateful you didn’t let that money evaporate into December spending.
4. Use Cash or Debit to Avoid Post-Holiday Debt and the Interest it Carries Credit cards are convenient—79% of holiday shoppers plan to use them—but they’re also one of the fastest ways to overspend. If you pay with cash or debit, you’re limited to the money you actually have.
If you do use credit:
· Pay the full balance when the bill comes due to avoid interest
· Use rewards and points strategically. Credit card points, cash-back offers, or travel miles can help offset expenses, but if you’re using those rewards cards for holiday spending, balance the reward against the interest rate. The best way to use rewards cards is to pay off the balance at the end of each month whenever possible.
· Stick to one payment method and track purchases in real time Using a single card or account helps you see the true total.
· Set a debt cutoff. Decide in advance how much holiday debt you are willing to take on.
· Avoid spreading debt across multiple cards. If you have balances on several accounts, pay down the highest-interest card first, and use the lowest-interest card for your holiday shopping.
5. Embrace Cost-Effective Traditions Celebrating doesn’t have to mean spending big. Some of the best holiday memories come from low-cost, high-joy traditions. It’s likely that your friends and family will appreciate the cost-effective suggestions.
Try incorporating:
· Homemade gifts like baked goods, crafts, or photo books
· Shared experiences instead of expensive items
· Potluck dinners where everyone contributes
· Name-draw gift exchanges to limit spending
· Budget-friendly outings like sledding, movie nights, or neighborhood light tours
These traditions keep the holiday spirit alive without putting a dent in your financial goals.
A Little Preparation Goes a Long Way
Overspending typically happens when you begin the season without a plan. A few thoughtful steps now—budgeting, anticipating costs, setting savings aside, and choosing more cost-efficient traditions—can dramatically reduce financial stress later.
Start strong, stick to your plan, and enjoy a holiday season that feels festive and financially smart.