How to Budget for the Holidays, Even if You Have Debt

The holidays are more expensive than ever (thanks, inflation!) and social pressure can make us want to buy and do all the things in December, which can deplete your bank account by January. So, how do you make the most of the holidays without your financial goals going off track? We spoke to Rianka Dorsainvil, a Certified Financial Planner®, and co-CEO and senior financial planner at 2050 Wealth Partners, to get her best tips for making the most of your money during the December spending rush. 

FEATURED EXPERT: RIANKA DORSAINVIL

Rianka Dorsainvil - certified financial planner, co-CEO, and senior financial planner at 2050 Wealth Partners

How can I create a holiday budget?

Make sure your fixed expenses (think: rent) are covered. You’ll also want to add some buffer with things like utilities and groceries — especially if you’re hosting. You want to really focus on those variable expenses, such as entertainment and dining out. Try to see if you can scale back on some of those, so you can have a little bit more freedom with your holiday budget.

Make a list of people you’re planning to give presents to. Once you have it written down or in a spreadsheet, you can play with numbers. If you have $400 total to spend on gifts, how does it make sense to allocate? If you have a lot of people on your list, think of other options to celebrate, like a white elephant gift exchange. If you haven’t downloaded a budgeting app, this is the time to do it (I like You Need a Budget) — that way, you can see your spending in real time.

How can I afford the holidays if I’m paying down debt?

This is where communication comes into play. Tell your friends: “I love you, but I’m paying down a little bit of debt right now.” This is where you can bring up the idea of a gift exchange, so you’re buying one gift instead of 10. And then it goes back to the detailed budget. Let’s say you’ve set aside a certain amount for gifting this holiday. You want to make sure every dollar counts, and you’re creating memorable moments, too. So maybe that’s a picnic where you can gather as a family. Instead of going to a restaurant. You can also call your credit card company (especially if you’ve been a loyal customer and have paid on time) and say: "Hey, I'm trying to pay off this debt. I would love to pay it off sooner. Instead of paying 29.99%, can I pay 20%?" And that difference of nearly 10% will definitely go a long way. The worst they can say is no, but you don't know if you don't ask. 

How do I rebuild my savings after the holidays?

I’m not about playing the shame game — I did it, it’s done. I've used my credit card a little bit more than I anticipated because I got a little pajama-friendly and crazy with my niece and nephews. So now what? You have to figure out and set clear financial goals. Look at your budget and say: "The holidays are done, and so where am I now?" Go back to the basics — fixed expenses and variable expenses. Reduce the variable expenses so that you can rebuild your savings.

How can I make my money go further during the holidays?

I recommend concentrating on one or two stores, downloading their apps, and knowing their deals. For example, Old Navy offers Super Cash, where if you spend a certain amount, you get a certain amount off. You also might want to stack coupons and sign up for any perks through your credit card. It requires a little bit of work in the beginning, but by spending a high dollar amount in one or two stores, you may unlock savings and deals you wouldn’t if you spread around your shopping. 

Any tips for avoiding overspending during the holidays?

Use a digital budget app. A real-time budgeting app shows you exactly how much money you have left.

Use cash or a debit card. If you do use a card, focus on a card that partners with a specific store you’re planning to shop in. You usually have to opt into these deals before you buy. 

Think of your future self. People can get caught up in the endorphins of spending, so I really advise you to take a step back and think of meaningful moments. Those don’t have to be expensive! 

This interview has been edited and condensed for clarity.