6 creative holiday savings tips to keep your budget in check this year

The holiday season is fast approaching, and for many, it’s one of the busiest and most expensive times of the year. In fact, holiday shoppers plan to spend an average of $1,638 on gifts, travel, and entertainment this year, according to PWC’s 2024 Holiday Outlook. That’s a 7% increase over 2023 and a 15% jump from 2022. While making travel plans, hosting gatherings, and shopping for loved ones can be exciting, you could end up throwing your budget out of whack if you aren’t careful. Consider these six strategies to keep your holiday spending in check and start 2025 debt-free.

6 creative holiday savings tips to try

Ideally, the key to ensuring your holiday spending doesn’t make a massive dent in your budget is to factor it into your budget throughout the year. However, if you haven’t been saving for the holidays, you can still be strategic about spending and saving money now.

1. Use a sinking fund

A sinking fund is a savings account meant for a planned future expense that doesn’t fit into your regular monthly budget, such as a vacation, home down payment — or holiday shopping. By setting aside a bit of money on a consistent basis, you can spread out the expense and avoid taking on new debt or scrambling for funds when you need them. And there is still some time between now and the height of the holiday season you can use to build up savings for holiday expenses such as gifts, parties, decorations, and more. Review your budget to see how much you can comfortably afford to set aside each time you get paid. You may also want to revisit your current savings goals and see if you can adjust your savings account contributions to prioritize holiday savings until the end of the year.

2. Take advantage of holiday savings accounts

Some banks and credit unions offer accounts specifically designed for holiday savings. For the most part, they are similar to traditional savings accounts. However, they may come with lower fees or higher interest rates to encourage saving. Keep in mind, though, that there may be minimum balance requirements or penalties for withdrawing money before the holidays. If you’d prefer a savings account with fewer restrictions, you can also consider a high-yield savings account, which pays above-average interest and can be used year-round.

3. Leverage cash back

If you have a rewards credit card, now is a good time to review your rewards balance. See if you have enough points or cash back to redeem for gift cards or a statement credit (or even rewards miles for upcoming travel) to offset holiday costs. It also pays to be strategic about how you use your rewards card over the next couple of months. For example, if your card offers rotating categories that earn a higher rewards rate, choose one that aligns with your holiday spending plans, such as department stores or restaurants. Of course, if you do put holiday expenses on a card, be sure to stick with your budget so you can pay off the full balance each month. Otherwise, interest charges will wipe out your rewards, and then some. But even if you don’t have a credit card — or don’t want to use one — you can still earn cash back on your holiday spending. Cash back browser extensions such as Rakuten, Honey, and Capital One Shopping award cash back on purchases made at popular retailers, regardless of the payment method you use. Plus, they can also automatically search for and apply coupons when you shop online.

4. Don’t discount a homemade gift or a gift exchange

Ultimately, the holidays aren’t about overspending or buying luxury gifts for everyone on your list. Opting for a homemade gift can be a more intentional, heartfelt, and affordable way to show your loved ones that you’re thinking of them this season. Think: Baked goods, handmade ornaments, or even handwritten letters. Another option is to set up a gift exchange with your friends and family. If you have a larger family or friend group, buying an individual gift for every person on that list can significantly dent your budget. If you can coordinate a gift exchange, it will save you money, and you’ll be able to put more time and thought into the perfect gift for whomever you’re shopping for.

5. Plan ahead for holiday meals

If you’re hosting a party or holiday dinner, pre-planning can help you manage the costs. Buying items in bulk, purchasing non-perishables ahead of time when there’s a good sale, and spending some time searching for coupons can help you keep costs low. Another creative way to save time and money on holiday meals is to host a potluck dinner. Reach out to your guests and see if everyone can commit to bringing one dish with them to your event. That way, you can save money on groceries — and avoid the headache involved with cooking multiple dishes.

6. Open a credit card with a 0% introductory APR

These days, many Americans are struggling to pay for even their most basic living expenses. Although relying on credit cards when money is tight is rarely advised, the truth is that sometimes, it’s necessary. However, you can use credit responsibly this holiday season, even if you need to carry a balance for a few months. The key is to choose a card with an introductory 0% APR, which allows new cardholders to avoid interest charges for a limited time. When you open a 0% APR card, the purchases you make will not accrue interest until the end of the introductory period. Typically, intro periods last anywhere from six to 21 months. After that, your balance begins accruing interest at the standard APR. So, as long as you pay your balance in full by the time your intro period ends, you won’t accumulate any extra debt in the form of interest charges. It’s important to stress that this strategy should only be used if you have a holiday budget in place and a plan for paying off your balance in time. If you struggle with managing debt or controlling spending, this probably isn’t the best route to take. Many people struggle to fit holiday spending into their budget, and for good reason. With the rapidly rising cost of living and competing financial obligations, it can be a challenge to find spare funds to direct toward holiday expenses without having to make sacrifices in other areas. However, with the right strategies, you can lessen the financial blow of the holiday season.