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The holidays are here, bringing that familiar urge to spend a little extra on the people we love. It’s a good feeling…until the bills arrive. If you've ever found yourself dreading your January credit card statements, you’re not alone. But with thoughtful planning, you can keep your holiday joy intact by avoiding or minimizing debt the season often causes.

Start with a Holiday Budget (and Stick to It!) 

It may not be at the top of your list for merry activities, but creating a holiday budget can actually be quite liberating. Instead of worrying about where all your money went, you can confidently enjoy the festivities knowing you’ve set boundaries. Make a list of everyone you plan to shop for and set a spending limit per person. Don’t forget the “extras” (decorations, meals, travel expenses, etc.). 

As a rule of thumb, it’s wise to aim to spend no more than 1.5% of your annual income on holiday expenses. For example, if you make $50,000 a year, try to keep buying to under $750. This percentage can be adjusted based on what’s realistic for your situation. Having a target can be very helpful. 

Don’t Get Caught Up in the “Buy Now, Pay Later” Trap 

“Buy now, pay later” (BNPL) options have exploded. Services like Afterpay and Klarna offer small, interest-free installment plans that seem harmless, but these little debts add up. A survey by Credit Karma found that 38% of U.S. consumers who used BNPL services missed at least one payment, and nearly three-fourths said they saw their credit scores drop as a result. If you’re tempted, ask yourself if you’d buy the item outright if you had the cash in hand. If the answer is no, it’s probably best to skip it.  

Get Creative with Gifting 

Homemade or personalized items often mean more to loved ones than store-bought gifts. Put together a “Movie Night” gift basket, offer a "free night of babysitting" coupon, or create something if you’re artistically inclined. These ideas cost less while allowing you to give something heartfelt. If you’re celebrating Christmas with family, opt for a Secret Santa, so everyone buys just one gift instead of one for each person. 

Plan for Next Year 

If this year’s shopping is already underway or finished, start planning for the next holiday season. Small steps, like setting aside $20 or $30 a month, can add up by the time next year’s holiday season rolls around. You’ll have a holiday fund ready to go! 

Bottom Line: Keep It Simple and Savor the Season 

Remember that the holidays are about spending time with loved ones, not just spending money. Connect with your financial institution to see what resources they offer to support your goals this season. 

This article is shared by our partners at GreenPath Financial Wellness, a trusted national non-profit.