Advanced planning and budgeting: Key to keeping holiday spending in check

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COLUMBUS, Ohio—With all the expenses that typically occurs during the winter holiday season, avoiding overspending can be hard. In fact, many struggle to stay within normal spending limits during the holidays, often taking months into the next year to pay off the resulting debt.

While this has become an annual issue for many consumers, the economic stress many are already dealing with now as a result of the COVID-19 pandemic has caused the issue to take on even more significance this year.

Already, some 49 percent of consumers say the pandemic has negatively impacted their holiday budgets, according to the 2020 Holiday Outlook by PwC, formerly Price Waterhouse Coopers. The international accounting firm’s survey of more than 1,000 consumers found that total holiday spending will be 3% less this year, with the average consumer planning to spend $1,248 this year compared to last year’s total of $1,284.

Additionally, more consumers are looking for money-saving deals on gifts, with 67% of respondents planning to wait to finish shopping until Black Friday week or the week after, the survey found. And while many people plan to have safe holiday celebrations with just immediate family or those that live in their household, spending on home and holiday furnishings and nongift clothing items for themselves or their families can still add up.

“That’s why it’s so important—especially this year—that as you plan for the holidays, to make sure that you have a clear picture of where you are financially,” said Amanda Woods, an Ohio State University Extension program specialist in healthy finances. OSU Extension is the outreach arm of The Ohio State University College of Food, Agricultural, and Environmental Sciences (CFAES).

“This year feels much different for many as we make our way into the holiday season,” she said. “The way we live our lives has changed, the pressure to maintain financially is mounting in the face of this pandemic, and all of this can make planning for the holidays a bit more stressful.

“So, understanding where you are financially will help you to make a plan that works for you. When it comes to our finances now and all year long, knowledge is power.”

Woods said it’s important to create a budget, a list of priorities, and then stick to it.

“Check it often and be as honest as you can with yourself about staying true to the spending limit that you’ve set for yourself,” she said. “If you can’t afford something, don’t charge it on credit. Instead, review your list and budget, and perhaps reprioritize your list.” 

Other tips to help you formulate a holiday spending plan to avoid financial pitfalls include:

  • Make savings automatic—set aside a portion of your paycheck. Start saving now. Transfer to your savings a set amount of money from each paycheck.
  • Start with a list of everything you’ll be spending money on during the holidays. Include all gifts, foods, drinks, decorations, and charitable giving.
  • Set reasonable expectations. Take a look at your monthly budget, decide how much you can really spend on those holiday extras, and plan your budget accordingly.
  • To determine your holiday budget, review what you spent last year. Then, use that amount as a guide for this year. Remember to include all money spent on gifts, foods, drinks, decorations, and charitable giving.
  • Once you’ve created your budget, stick to it.
  • After your budget is made, prioritize where and how you’ll spend. Be sure to account for everything—gifts, decorations, donations, a new piece of clothing, groceries, and baking.
  • Prioritize. If you come up short, determine where you can do some trimming. Can you decide not to buy any new holiday decorations this year? Can you pledge not to spend any money on yourself when you’re out shopping?
  • So many things about this year are nontraditional, so if your money is tighter this year than usual, think about starting new traditions that don’t require you to spend as much money. For example, instead of buying for everyone in your family, you can opt for a family gift exchange that will allow you to buy for one person instead of the whole gang. That way everyone still gets to be involved in the holiday experience. If you need to, adopt a new tradition that requires no money spent at all, like watching a holiday movie together, baking your favorite holiday treat, or taking a festive holiday walk.
  • Keep an eye out for online and in-store deals and sales. Retailers are offering Black Friday deals over multiple weeks this year. Grocery stores often offer specials on holiday-related food items. And limit the number of shopping trips: The more you are in the stores, the greater the chance you’ll make impulse purchases.
  • Don’t wait until the last minute. That’s one of the best ways to go into debt during the holiday season. That way you can take advantage of the holiday sales and free online shipping.
  • Look ahead. Now’s the time to realistically start planning for next year. Take the holiday budget you’ve set for this year—or what you wish it could be—divide it by 12 and set up an automated plan to deposit that amount directly from your paycheck into a special savings account for holiday spending next year.

Finally, Woods stresses the point about overspending and avoiding burdensome credit card debt.

“It can be very tempting this time of year to splurge and overspend, but when it comes to your financial health in the new year, it is simply not worth starting out with holiday debt,” she said. “This is especially true during a time of such uncertainty. It would be beneficial to try to set yourself up for a financially healthy start to a new year.”

More consumer tips and helpful information from CFAES experts can be found at

Tracy Turner
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Amanda Woods