Christmas spending tips: Cut the costs, keep the cheer

The season of giving is around the corner. For many, Christmas conjures up warm memories of family, togetherness, traditions and joy. But it also might bring financial stress.

If you’re one of those families balancing a tight budget this year, know that you’re not alone. Two out of every three Americans have concerns about how they’ll manage their holiday expenses this year, according to Thrivent’s 2024 Holiday Spending Survey.^* Living paycheck to paycheck and the increased cost of goods and services (in part, due to inflation) were key factors behind these financial concerns. In addition, the survey found social media is influencing people’s financial decisions more than ever before.

However, with some planning and creativity, you’ll find it’s possible to create meaningful moments and give gifts that show your love for family and friends while sticking to your financial goals. Here’s how.

With high prices a reality, you may need to create a spending strategy tailored to your current financial situation. The bottom line: How much can you afford to spend?

Start by reflecting on what brings you the most joy each season. Is it the gifts that family members will find under the tree? Is it donations to the nonprofits that matter most to you? Is it time spent with family and friends, either at festive celebrations or cozy gatherings at home?

Once you know what you want your experience to be, you can start to build your holiday budget. But before you start putting dollar amounts to categories like gifts, donations, food, travel expenses and décor, you’ll want to analyze your current expenses.

“Perhaps there are some ways you can skim and trim a bit in the months leading up to Christmas to free up some dollars,” suggests Julianne Allen, a coach with Thrivent’s Money Canvas^® program. “Another idea is to pay ahead on regular monthly expenses, if you can afford to do so. Then, when you get to December, some of your normal expenses have been prepaid.”

Thrivent’s survey found that many Americans plan to shift their holiday spending habits given the current economy, with 33% planning to purchase less expensive gifts and 31% planning to buy fewer gifts overall. What will be your gift plan? Will you buy for everyone, and how much will you spend?

There are many types of budgets and tactics that can help you meet your needs. Just make sure you leave enough room in your budget to cover what you consider necessary expenses without dipping into your emergency savings or adding to debt, Allen says.

Tip: Keep track of your expenses this year, so you can have a baseline for next year’s holiday budget and you can start saving earlier!

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You should never go blindly into the gift-giving season, says Kay Blunck, Advice Services consultant at Thrivent. “Your list should be who you are going to purchase for and what you’re going to purchase,” she says. “I like to keep a price next to the items, too, so I know if the sale price is a good price, or if the sale price is down from a markup a few weeks earlier.”

Having a list also is going to tell you what not to buy, Blunck says. For example, imagine you’re shopping (it could be in a store or online), and you see a $50 item on sale for $20. “You may think it’s a good deal; 'I should get it,'” she says. “But if it’s not on your list, are you saving $30 or are you spending $20?”

You’ve developed your budget, so you know how much you want to spend. But if you have kids, have you thought about how many gifts you are planning to give them?

Some families choose to do three gifts, in honor of the three gifts brought to Jesus by the Magi. Others follow the “want, need, wear, read” strategy. It encourages a thoughtful selection of gifts based on the person’s interests and what they may need.

Another consideration is a family gift, a larger item like a gaming system, an outing or even a family trip to a favorite destination. This is a tradition that can continue as your children grow, and later they even may help influence what the gift could be. This also creates space for family conversations about how you can best celebrate the season together and keep expectations in check.

Whether your shopping list is on paper or your phone, just remember that only items on the list can be added to your actual or virtual shopping cart.

Tip: Save a few dollars by wrapping gifts in homemade paper, decorated by your kids. Instead of purchasing rolls of festive wrap, get a roll of plain paper and hand crayons and markers to your kids for a project. Or, you can do it, too. It adds a personal touch to all your gifts. (Added bonus: no need to store multiple half-used rolls of paper.)

If you’re hosting your family, friend or neighborhood holiday celebration, you don’t need to foot the cost solo. Nor does it need to be an elaborate meal.

Plan a potluck and assign guests a dish to bring to share. Or tell them what you’ll be providing and simply ask them to bring something to add. You may end up with multiple salads or desserts, but when you ask people to bring their favorite, you typically get a good array of food.

Or, instead of a full meal (everyone always talks about how they eat too much during the holidays), do an appetizer or dessert bar.

If your gatherings include gifts, consider a Secret Santa or gift exchange instead of buying presents for everyone. It keeps costs down and adds an element of fun and surprise. Don’t forget to set a reasonable spending cap so no one feels pressured to overspend and everyone can enjoy giving and receiving gifts within their means.

Tip: Watch grocery store sales and coupons in the months leading up to the holiday. If you do a lot of baking, stock up on staples when they go on sale. Meats and desserts can be frozen.

Who doesn’t like a deal? But you want to make sure that you’re actually getting one.

Start tracking prices as soon as you get your lists made, so you can shop for the best price. Set up price alerts on your phone to get notifications of sales. Also be on the hunt for coupons and promo codes that can save you dollars. Make sure it’s the right price before committing, and review the return policy.

If you’re shopping online, search around. Black Friday, Cyber Monday and other pre-Christmas sales can offer deep discounts if you shop wisely. Look for free shipping but be careful about buying more (perhaps things you don’t need) to meet an order minimum. It’s easy to get drawn in by online sales.

Keep social media in check. While social platforms can offer great ideas, they also encourage impulsive purchases. It may be time to unfollow or hide retailers and reduce your screen time.

Blunck suggests keeping receipts and watching sales. “A lot of companies will price match, even days like Black Friday,” she says. “If you buy something, then see it go on sale within the return window, take in the receipts and ask for the sale price. I did that recently with some clothes and got almost $70 back on a $200 purchase.”

Tip: Know the starting cost of an item. Retailers may inflate a price before lowering it, making it seem like a sale. Prices also may go up closer to the holidays.

Do-it-yourself (DIY) gifts and experiences can be a great way to create lasting memories and show someone how much you care.

Every year, Blunck’s family gifts their best friends a family photo session. “We know that family photos aren’t something they’d necessarily buy for themselves,” she says. “It means more to them than a board game we could pick up and saves us the shopping.”

Consider these other unique gift ideas:

If you love to spend time in the kitchen, you could package into festive tins or jars:

• A batch of your favorite cookies or fudge.
• Soups and salads.
• Homemade jam.
• Dried fruits and nuts.
• Popcorn balls.
• Infused oils or vinegars with herbs and spices.

If you’re crafty, consider making:

• Christmas ornaments.
• Painted mugs.
• Tied blankets.
• Knitted scarves.
• Personalized ornaments or decorations.

If family time is high on your priority list, consider:

• Gifts of an annual membership to a zoo or museum.
• Planning an outing for your family to enjoy together.
• Going to see the brightly shining lights that adorn others’ homes or the special displays that local communities create.
• Planning a special movie night, complete with pizza and popcorn, at home.

And if the budget is super tight, consider writing individual letters to let special people in your life know they are loved. They don’t have to be overly sentimental—they just need to sound like you. You can share memories from the past, admiration and gratitude. You also could make homemade coupon books.

Tip: Make your DIY gift personal to each person you are sharing it with. It makes them feel special and appreciated knowing you gave your time to make it for them.

Lead a Thrivent Action Team to give back

Gather a volunteer team of family or friends to raise funds or supplies to make a difference in your community this holiday season. If you’re a Thrivent client with membership, Thrivent will provide the resources you need to get started.

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In the spirit of the season, consider if you want to spend some time giving back to people or causes important to you through acts of generosity.

“Instead of spending oodles of money on each other, you could do a contribution to a favorite nonprofit,” Allen says. “Or, instead of stressing about a big meal, you could go as a family and serve at a soup kitchen or a community-sponsored holiday dinner.”

Maybe your community has a program where you can get the name of a child—or even a family—that you can adopt to help with Christmas gifts and essentials this year. Enlist the help of your children in selecting the items you’ll give. Food banks also need donations—money, items and volunteers—to help make the season bright for their recipients.

You also could make a meaningful impact in the lives of those who won’t be home for Christmas, such as sending Christmas cards to those deployed. The holidays can be especially hard for the elderly, who may not receive many visitors during a time that celebrates connection. Get a group together to go Christmas caroling or to bring homemade cards and small gifts to a local assisted living facility, nursing home or to the homes of shut ins.

These inexpensive efforts can go a long way to brighten someone’s day.

Tip: Reach out to a local church or nonprofit and ask if there’s a way you could serve to help make the season merry and bright for those who may be struggling to do so.

To avoid having to face an extra-large credit card bill in January, try using a debit card or cash for your holiday expenses instead. The envelope budgeting system—where you can allocate a certain amount of money for gifts, décor, meals and more into individual envelopes—can help keep money in check, Allen says. When the envelope is empty, the shopping is complete.

Start early and buy one gift a week. “But remember to write down what you’ve purchased,” Allen says. “Sometimes you forget what you bought in October and then think you have to crazily go out and shop in December.”

Blunck suggests putting your dependent care or health flexible spending account to work for you. If you can afford to pay for your expenses in these areas as you go throughout the year, do so and save the receipts.

“Then in October or November, when you’re ready to start making holiday purchases, submit your receipts for reimbursement,” she says. “That becomes your spending budget; it’s another way to automatically save.”

Tip: Don’t rely completely on credit unless you have a plan to pay off the balance quickly. That money you could end up paying in interest could buy another gift.

Though it can feel odd to plan nearly a year out, there's no better time than now to start planning for next year's holidays.

Earlier we suggested that you keep track of this year’s expenses. Use that total, divide by 12, and put that amount of money into a high-yield or regular savings account. Consider directly depositing it from your paycheck. If you don’t see it, you won’t spend it.

“Even consider closing off the view of that account on your mobile device so that when you’re checking your accounts, you don’t even see that savings account,” Blunck says.

If the envelope budgeting system previously mentioned works for you, set it up now and stash a designated amount into each envelope monthly, Allen says. Trim other expenses to make sure you’re reaching your goal, and your envelopes will be ready when you are for a shopping trip!

Throughout the year, when you’re out shopping with your kids and they say they want a certain toy or game, take a photo of it instead. “Tell them, 'We can’t get it today, but we’ll take a photo and send it to Santa' with their letter for Christmas,” Blunck says. Keep adding to the list throughout the year, and as Christmas approaches, you can assess if they still want the item or if it can be removed.

And if you are a good list keeper, you may want to shop throughout the year. You can take advantage of sales or finding that special something for someone and get a head start on your holiday gifting.

Tip: Open a special savings account designated for your holiday spending (perhaps even at another financial institution) and direct deposit into it monthly. You won’t miss the money you don’t see, and you won’t be tempted to use it for another reason.