The holidays are supposed to be the most wonderful time of the year, but for a lot of Americans they’re also the most expensive. If you’re already feeling the squeeze, you’re in good company: in a Penny Hoarder survey published this fall, 77% of people said they’re changing how they buy gifts because of higher prices.
The good news is that a little planning now can save you from a January full of credit card regret. Here’s a simple, realistic way to budget for the holidays without going into debt.
The short version: set one total number you can pay in cash, split it into gifts, food, travel and extras, make a gift list with a dollar amount next to each name, and track every purchase. Be careful with buy now, pay later, and start a small “holiday fund” for next year in January.
What Americans are planning to spend in 2026
A few recent surveys give a useful reality check:
- Gifts: Gallup found Americans expect to spend an average of $1,011 on holiday gifts this year, about the same as the last two years.
- Everything combined: NerdWallet’s 2026 Holiday Spending Report puts the average total holiday budget (gifts, travel, food, decorations and more) at $2,525 among people who plan to spend.
- Debt worries: in the same NerdWallet survey, 19% of holiday shoppers expect credit card bills they can’t pay off in full and on time.
Those are averages, not targets. The right number for you is the one you can pay without borrowing.
Step 1: Pick one total number
Look at your bank balance and your next few paychecks, then decide what you can genuinely spend after rent, bills and savings. Write that number down. This is your holiday budget, and everything else has to fit inside it.
If the number feels small, that’s okay. A thoughtful $25 gift is far better than a $100 gift that takes until March to pay off.
Step 2: Split it into categories
Gifts usually get all the attention, but the “hidden” costs are what break most holiday budgets. Divide your total into:
- Gifts for family, friends, coworkers and kids’ teachers
- Food and hosting, from holiday dinners to party contributions
- Travel, including gas, flights and pet sitting
- Decorations and extras, like wrapping paper, cards, postage and outfits
- A small buffer of 5% to 10% for things you forgot
Step 3: Make a gift list with prices
Write down everyone you plan to buy for and put a dollar amount next to each name. Add it up. If the total is higher than your gift budget, now is the time to adjust, not at the checkout.
A few ways to shrink the list without feeling stingy:
- Suggest a Secret Santa or gift exchange for big families or friend groups. Most people are relieved when someone else suggests it.
- Set a spending limit with siblings or friends, like $25 each.
- Give experiences or time: a homemade dinner, babysitting, or a day trip together.
- Buy one great family gift instead of small gifts for every person.
Step 4: Track every purchase
Holiday spending is spread across dozens of small purchases, which makes it easy to lose track. Use a simple note on your phone, a spreadsheet or a budgeting app, and update it after every purchase. If you’re looking for an app, our guide to the best budgeting apps covers good free options.
Step 5: Be careful with buy now, pay later
Buy now, pay later (BNPL) services like Klarna, Afterpay and Affirm make it easy to split a purchase into smaller payments. That can be helpful, but it also makes it easy to overspend. NerdWallet found that 38% of holiday shoppers plan to use BNPL, and of those, 38% expect they won’t be able to pay it all back in full and on time.
If you do use BNPL, keep it to one or two purchases, set calendar reminders for every payment and never use it for something you couldn’t afford to pay for today.
Step 6: Use deals wisely, not as an excuse
Black Friday and Cyber Monday can save you real money on things you already planned to buy. The trick is to shop from your list, not from the ads. Our guide on how to spot real Black Friday tech deals explains how to tell a real discount from a fake one.
Other easy savings:
- Stack store loyalty programs, cash-back apps and credit card rewards (only if you pay your card off in full).
- Check if stores offer price adjustments if an item drops in price after you buy it.
- Choose free shipping thresholds carefully so you don’t buy extra stuff just to qualify.
Step 7: Start next year’s holiday fund in January
The easiest way to have a stress-free holiday next year is to save a little each month. If you plan to spend $1,200 next year, that’s $100 a month. Set up an automatic transfer to a separate savings account and give it a fun name like “Holiday 2027.”
If you’ve already overspent
Don’t panic. Make a list of everything you owe, pay off the highest-interest balance first and pause non-essential spending in January. Return or exchange anything you don’t need while you’re still inside the return window. Then use what you learned to set next year’s budget.
The bottom line
The holidays are about people, not price tags. Pick a number you can pay in cash, plan your gifts ahead, track as you go and be cautious with credit and BNPL. Your January self will thank you.
Survey figures come from Gallup (November 2026), NerdWallet’s 2026 Holiday Spending Report and The Penny Hoarder’s 2026 holiday survey. This article is general information, not personal financial advice.
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