7 clever ways to avoid overspending this holiday season

The holiday season is a time of joy, celebration, and unfortunately, for many, overspending. After all, it's easy to get caught up in the spirit of giving and end up with a hefty credit card bill come January. 

According to the 2023 Deloitte holiday survey, consumers plan to spend an average of $1,652 on retail shopping this season, which surpasses pre-pandemic holiday spending figures for the first time. And, if you add in any other expenses — like the costs of a little holiday travel or the expenses of hosting a dinner party — it can be a recipe for expensive debt.

But while most people are stuck shelling out at least some extra money during the holiday season, these types of extra costs don't have to break the bank. With a bit of planning and some clever strategies, you can enjoy the festivities without overspending. 

Find out more about how your holiday budget could benefit from today's top savings rates here.

7 clever ways to avoid overspending this holiday season

If you want to avoid the overspending trap this holiday season, the following strategies may be able to help.

Create a realistic budget

Before you start any holiday shopping, it's important to take the time to create a detailed budget for your holiday expenses. Include gifts, decorations, travel and any other potential costs. Having a clear spending plan will help you stay on track and avoid impulsive purchases, which, in turn, saves you from the pitfalls of overspending.

Put spare money into a CD 

Another simple but effective way to prevent overspending this holiday season is to allocate any spare money (i.e. the money that isn't earmarked for holiday spending) into a certificate of deposit (CD). CDs are low-risk, interest-bearing deposits with fixed terms. 

By putting your extra funds into a CD, you limit immediate access to the money, discouraging impulsive spending. Plus, you'll earn interest on your savings over time — and it's a great time to do that since CD rates are as high as 5.25% or more right now.

Explore how the right CD could help you avoid overspending this year.

Let your money grow in the right account

You can also consider opening a high-yield savings account to stash away your holiday savings. These accounts offer higher interest rates than traditional savings accounts, allowing your money to grow over time. For example, right now, it's easy to find a high-yield savings account offering rates as high as 5% or more — but regular savings accounts only offer an average of 0.46% on your money. 

And, not only will you earn interest on your money, but having a designated savings account for the holidays makes it easier to track your progress and helps deter you from dipping into the funds for non-essential expenses.

Make a list (and check it twice)

Santa isn't the only one who benefits from a list during the holidays. Before hitting the stores or going online, create a list of the gifts you need to buy. This will help you stay focused and avoid the temptation of spending money on unnecessary items.

Take advantage of discounts and cash-back offers

It can also help to keep an eye out for sales, discounts and cash-back offers both in-store and online. Many retailers offer special promotions during the holiday season, and taking advantage of these can lead to significant savings. You may also benefit from using cash-back apps or credit cards that offer rewards to maximize your savings.

Consider DIY gifts

Another option is to get creative and consider making some of your gifts. Handmade gifts not only add a personal touch but can also be more affordable than store-bought items — which helps you to avoid overspending. Whether it's a homemade candle, a knitted scarf or a batch of delicious cookies, DIY gifts can be both thoughtful and budget-friendly.

Secret Santa or gift exchanges

If you have a large family or group of friends, suggest doing a Secret Santa or gift exchange rather than buying a gift for every person. This way, each person only has to buy one gift, reducing the overall financial burden for everyone involved.

The bottom line

With a combination of careful planning, budgeting and smart financial decisions, you can enjoy a festive holiday season without overspending. And, by incorporating these strategies into your holiday approach, you'll not only safeguard your finances but also set the stage for a financially responsible new year.