Posted on Friday, November 7, 2025
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by AMAC, D.J. Wilson
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0 Comments
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Many people hate the “b” word for budget. They especially detest hearing that word during the holiday spending season. However, too many people go into debt over trying to please others. Later, come January and bill paying time, they face remorse. Learn why budgeting is a wise financial lifesaver particularly during the holiday season.
The runway analogy
It sometimes may seem too soon to think about holiday budgeting. However, like best-laid plans, it’s never too soon to start. Financial planners frequently use the analogy of having a long runway. For planes, this means that pilots have plenty of distance to land safely. In finance, this allots people valuable time and space to make well-informed decisions, such as avoiding reckless spending over the holidays to safeguard finances.
A power play
Did you know that simple actions can ease financial burdens during the holiday season? Getting off to a great start involves ridding oneself of negative perceptions related to budgeting. People are encouraged to look at budgeting through rose-colored lenses, allowing them to create a unique spending path to make the holiday season happier and more stress-free. Contrary to popular thought, budgeting is not a restrictive measure. Rather, people decide where their hard-earned money goes, thereby gaining spending power to live well and within reasonable means.
Don’t overextend
Getting into debt by spending more money than we have available is a foul idea no matter how we try to spin it. If you’ve ever overextended yourself, you already know that it is no fun to have to dig oneself out of a financial hole. For some, they must work harder to recover lost funds or cut back on plans, such as saying no to dining out or enjoying a weekend away with friends. For others, it might even mean temporarily living in discomfort – keeping the heat low to save money, walking to work rather than driving to save money on gas, or buying less groceries. In many cases, spending more than you can pay back can negatively impact credit. Therefore, overextending oneself over the holiday season is no way to greet the new year ahead.
Budget basics
Some people don’t budget because they don’t know how to start. Let’s briefly examine some helpful budget basics. Per Bankrate.com, the 50/30/20 rule is among the most used monthly budgeting strategies. Also popular are zero-based budgeting, envelope budgeting, and the pay-yourself-first method. Let’s quickly examine each option to get a general idea of what they mean:
50/30/20 rule
This means that 50 percent of the budget is allotted for needs, 30 percent for wants, and 20 percent for savings. This method is optimal for people who don’t carry a lot of debt so that they can put a nice chunk into savings each month.
Zero-based budgeting
This involves assigning every dollar of one’s income to a specific monthly expense. The result after subtracting expenses from one’s income equals zero. This method is optimal for people who are detail oriented and possess steady, set income and expenses.
Envelope budgeting (Also called cash stuffing)
Here, folks categorize expenses into digital or physical envelopes. This action establishes categories of spending to stay on budget. People who do this often use budgeting templates to organize expenses. This flexible method works well for people living paycheck to paycheck or with fluctuating income and expenses.
Pay yourself first (Also called reverse budgeting)
In this budget plan, people save chunks of money ahead of paying monthly expenses. That money can be broken down into various saving plans. This method works well for people without debt who seek to build savings for something futuristic such as a home down payment or buying a new vehicle.
Allocating money toward gifts
People who conscientiously use budgeting plans like those mentioned above likely understand how much money they have to allocate for holiday gifts. For people who don’t typically budget, or are new to budgeting, experts suggest starting from scratch by reviewing one’s income, expenses, and savings to determine how much to spend and save. Short and long-term goals should also be examined and considered. Frequently, it is helpful to review last year’s spending to observe patterns. One can follow the money trail and learn from it. This information can be used to make a fresh start. For instance, if you are guilty of overspending last year during the holiday season, you can prioritize expenses and stick to those which are essential. Per Truist, “Gift costs are an expense you can limit according to your own financial situation.”
Making lists
Making lists of who to buy for and how much to spend on each gift is a helpful budgeting tool. It allows people to evaluate whether people they are buying for should be on their list and determine if the amounts they are spending are reasonable and affordable. This not only allows spenders to map out costs, but it also helps them be disciplined by staying on budget. Stick to the spending limits that are established and avoid going over.
A word about credit cards
Many experts wisely caution folks to avoid using credit cards for holiday gift purchases. It is particularly dangerous to use credit cards with high interest rates. Even when a cardholder attempts to pay down the balance, it can take a long time. The cardholder can end up paying much more than they realize. Carrying debt can also negatively impact a cardholder’s credit score. Per a 2024 study, credit card debt did not slow shoppers down as they spent for the holidays. Therefore, as a rule, set aside money to pay for holiday gifts and avoid using credit cards that can land you in financial trouble. People who tend to overspend should consider retiring their card until the balance is paid off in full.
Additional tips to avoid credit card debt:
- Don’t overdo it. Some people feel obligated to buy gifts for everyone they know, including family members, friends and their kids, neighbors, co-workers, and more. Even parents feel pressured to buy more for their kids. While it is likely a generous act, it can take a negative toll by increasing holiday stress and adding debt. If finances are tight, be selective and limit the gift giving.
- Set spending limits. It’s okay to let people know that finances are tight and establish reciprocal spending limit for gifts. This is a great way to continue to participate in a gift exchange while avoiding holiday debt.
- It’s okay to opt out. People understand that finances can be tight. If you are having a particularly rough year, let people know that you prefer to skip the gift exchange this year. Senior citizens on fixed incomes should not be afraid to speak up. It is much better to be honest and opt out rather than to go into debt.
- Consider DIY gifts. If you wish to give gifts on a budget, opt for cost-effective homemade ones such as baked goods and personalized crafts. If you don’t feel particularly creative, offer coupons for favors. Consider giving out coupons to walk Aunt Jane’s dog, mow the neighbor’s lawn, wash Dad’s car, or babysit for your niece or nephew. Then make good on them.
- Watch for sales. Once you’ve made your gift list, begin watching for sales and shop for bargains. Be friendly with store staff who can advise you when things will go on sale, watch for free shipping days for goods, use price comparison websites, take advantage of sale prices and membership discounts, shop at stores offering price matches, and be flexible with your purchase plan.
The 30-day rule
We’ve talked about the benefits of a long runway, but those who are left with a shorter runway (for instance only one month to save) can jump into action with the 30-day rule. Note that this may not work for everyone, but the rule can help people who are guilty of spending too much in November, just ahead of the December holidays. The rule involves waiting 30 days before making non-essential purchases. Here, a person may use the month of November to completely put impulse spending on hold. This pause means sticking to a strict monthly budget for November. Then, take the money that was saved and apply it toward holiday gift buying in December.
Avoiding financial hangovers
Holidays are a time of joy, but sadly this notion can get lost in the gift-giving frenzy. Actor Jim Carrey makes a good point in saying, “No holiday should manipulate you to the point where you’re going into debt just to show someone you love them.” While it is practical to budget year-round, join a holiday savings club early on, or begin shopping for the holidays in advance, most people unfortunately don’t plan that far ahead. By waiting, we must apply wise financial strategies to keep the holidays calm and happy. If you find yourself scrambling to afford or buy gifts, take a deep breath. Understand that giving gifts is optional and it comes from the heart. Nobody wants you to go into debt to buy them a present that they may or may not even use. Rather, focus on the gift of time that you can share with family and friends, for togetherness is the true essence of the holiday season.
Disclosure: This article is purely informational and is not intended as a substitute for professional financial advice.
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