How to build a holiday budget – and stick to it

Holiday spending can take a big slice of anyone’s budget – gifts, groceries, decor and more add up quickly. In fact, according to Deloitte, the average holiday spending per person in 2025 was $1,595. And don't forget travel. Deloitte's survey of consumers turned up an average budget of $2,334 for holiday trips in 2025.

Watching so much money melt away in just a few months can put a damper on the cheer. We’ve put together a guide on how to budget for the holidays, to help you enjoy the season and come out with minimal – or better yet, no – debt.  

1. Review your spending

Look over your spending on last year's holiday season, with an eye toward answering these questions:

• If you set a budget, did you overspend or underspend on it?
• Any impulse purchases?
• Are there areas where you'd like to spend less this year?
• Has your current living situation changed, like having a new child or job?

Once you have the answers, it is time to start planning.

2. Categorize your holiday expenses

Holiday expenses are any expenses that contribute directly to the holidays. It does not include any regular/ongoing expenses like rent, utilities, car payments, and so forth. Groceries, however, can be included to the extent they contribute to a holiday dinner (like Thanksgiving) or any hosted holiday event.  

Categories can include:  

• Gifts for family, friends, co-workers, teachers, etc. (plus gift wrapping). 
• Food and drinks for holiday meals, parties, or other events.  
• Decorations.  
• Entertainment including tickets to events, souvenirs.  
• Travel including flights, car rentals, accommodation, gas.

When starting your budget, make sure that you list all the categories that apply. Think about which expenses feel essential to you and which you can do without.  

What is a realistic holiday budget?  

A common guideline for budgeting for the holidays is to spend no more than 1% of your gross income. So, say you make $50,000 before taxes, you should aim to hold spending to $500.

Don’t be alarmed if your budget feels small! We’re here to help you make any budget work.  

3. Determine where to spend the money

Now that you've set a budget, move on to figuring out how to divide that total among all the categories of holiday expenses. This will help you avoid spending too much on one category and ending up going over budget to pay for everything else.  

Adjust based on how important each category is to you. If you have a large family, for example, you may want to put more money into the “gifts” section and less into decorations. Or if you're expecting to travel for the holidays, allocate more of the budget to that section.  

You can use last year's spending to see where you went high or low compared to any estimates you made. Consider whether you're happy with how the actual spending divided up or want to tweak things for this year. You can blend last year's spending and projected this-year spending to create a solid holiday budget.

Sample Holiday Budget

In this example, let's say you traveled to see family for the holidays but this year you're hosting at your home. That means you can move money from the travel category to allow more spending on food and drink, decor, and maybe entertainment activities with guests.

4. Start saving toward your target

Realistically, the budget means nothing if you don’t have the money to fund it.

• Set up a sinking fund: Start saving early with a sinking fund, a savings account where you set aside money gradually for this specific, planned future expense. If your total is $500, you can work backwards to set savings goals weekly, bi-weekly, or monthly that will get you to that grand total by the time you plan to begin shopping.  
• Automate your savings: Make the process easy by setting up an automated deposit to your holiday fund. If your workplace offers direct deposit, see if you can add a rule to divert 1% of your pay to your holiday account. Or check to see if your bank or credit union has automatic transfers you can set up.
  Saving Tip: Many financial and investment apps let you round up debit or credit purchases to the next whole dollar amount and put the extra into savings or investment accounts. Examples include Bank of America's "Keep the Change" program and the Acorns investing app.
• Put your money in a high-yield savings account: These provide a higher interest rate so your money will grow faster. It also keeps the money separate from general savings or money earmarked for other expenses, increasing the chances you'll leave it alone till the holiday season.
  

How to stick to a holiday budget

Once you have your budget planned out and your savings building up, you'll know exactly how much you can spend on each category. Of course, you may adjust as you go, but as long as it all adds up to your target budget you should sail through the holidays without debt worries hanging over your head.  

Knowing how much you can spend is half the battle. The other half is actually making sure you only spend that much. Here are our tips for sticking to the holiday budget:  

1. Make a gift list in advance. Rather than getting stuck paying full (or even a marked up) price for last minute gifts, make a list of all the gifts you intend to buy. Start early, because the buying season begins in early October as retailers have stretched the definition of "Black Friday" to an extreme.  
   TextNow Tip: While some retailers like Amazon and Target have built-in wishlist features that can alert you to price changes, you can also use free tools like Honey or Slickdeals to watch for deals. 
2. DIY gifts or decorations. Some gifts can probably be DIY’ed (your co-worker might love a batch of homemade snickerdoodles just as much, if not more, than a token item from a store). And decorations can most definitely be DIY’ed. Garlands, table centerpieces, even ornaments can be made at home. There are plenty of TikTok and YouTube tutorials on making decorations that look even better than the store-bought stuff.
3. Look for deals and discounts on stuff you already use. This is more of a general budgeting tip but it applies even more during the holidays. To make more room in your budget, consider where you can cut back on routine spending. For example saving on your phone bill – or eliminating it – can really help. Same goes for subscriptions.  
   TextNow Tip: Check out TextNow Perks to find discounts and offers for things like: free months on Disney+ or Hulu for family movie nights, free Walmart+ trials for free grocery deliveries during the busy holiday season, and more.  
4. Curate your social feed to help. Rather than scroll through endless videos of people who are spending hundreds (if not thousands) on decor, gifts, and travel and feeling the pressure to do the same, manipulate your TikTok, Instagram, and YouTube algorithms to show you content that better aligns with normal consumption – budgeting, DIYing, small gifting, etc. There are plenty of creators and accounts that not only give you helpful tips but also make you feel better about your budget-wise holiday plans.

How to avoid impulse buys

We all do it – we see a video showing off some item we’ve never thought about and now we must have it, or we’re walking through Target and just happen upon the seasonal section. Here are some quick tips for getting impulse shopping under control this holiday season:  

1. Create a shopping list and stick to it: if it’s not on the list, don’t buy it. As simple as that.  
2. Set a 48-hour rule: If you see something and it’s not on your list, leave it for at least 48 hours. If after 48 hours, you’re still thinking about it and burning to buy it, you can. If you already forgot about it or it doesn't seem so necessary, it's painless to pass.  
3. Unsubscribe from marketing emails: If you don’t know about it, you won’t buy it.  

How to tackle credit card debt

We can’t talk about budgeting for the holidays without mentioning credit card debt. Running up card balances can bring a holiday debt hangover. According to Nerdwallet, 31% U.S. consumers still had credit card debt from previous holiday shopping and travel going into the most recent holiday season. That's a lot of accrued interest, making the holidays even more expensive after they're over.

How to avoid credit card debt

1. Create a budget. In our sample holiday budget, we used the 1% rule. But it’s important that you adjust the total budget number based on what you can actually afford. If 1% isn’t feasible with other surprise expenses (car repairs, house repairs, unexpected travel), make sure the number that is feasible is what’s reflected in your budget.  
2. Use your credit card like a debit card and pay it off with every paycheck. It's easy to treat your credit card limit as money you have, but it's actually money you are borrowing — and will pay interest on if you carry a balance. If possible, treat your credit card like a debit card, spending only as much as you can pay as you go. If you have a general monthly budget and know how much you can spend based on that, view that as your credit card limit. Use the credit card as you would your debit to buy essentials (groceries, household items, bills) and only use it on non-essentials if there’s room in the budget. Most importantly, do not delay paying it off. Every time you get paid, pay off your credit card in full (you don't have to wait for the credit card bill, go online to see and pay your balance whenever you like).
3. Set spending alerts. Most card providers will allow you to set spending limits or alerts on your card. This helps you stay within your budget when you don’t readily know how much you already spent, or what your progress is.  
4. Avoid “Buy Now, Pay Later” offers. It's tempting to take the offers that let you split a purchase into four or more payments, usually without interest. But they're still a debt commitment, and BNPL payments will cut into your ability to pay off credit card balances that do rack up interest. If possible, budget and save up for large purchases with a sinking fund rather than using BNPL.   

Holiday planning and spending doesn’t have to mean stress and debt. The holidays are for spending time with people you love, eating the food you love, and doing the things you love. With our holiday budget tips, make it a time for a bill statement that you’ll actually love.  

FAQs about holiday budgeting