How to Keep Your Holiday Budget in Check

The holidays are almost here—are you ready? 

This holiday season, many are looking for ways to make every dollar count, with Canadians expected to spend 10% less on gifts, travel, and entertainment than they did in 2024. However, spending less doesn’t mean celebrating less. With a realistic holiday budget, you can enjoy meaningful time with family and friends without the financial pressure that could otherwise carry over into the new year. You want to avoid holiday debt, and we want that for you, too, because it’s important to continue living within your means, even during the holidays.

According to our experts, the biggest financial mistake Canadians make when preparing for the holidays is not starting to save early enough. Many people underestimate how much money they'll actually need to cover their holiday expenses, but it’s never too late to start preparing for next year. 

In this post, we’re going to discuss how to manage holiday expenses so you can focus on what matters most while still living within your means. 

1. Review Your Finances and Set a Holiday Budget 

Review your income and expenses to see what you can realistically afford to spend for the holidays. Create a holiday spending plan that includes gifts, decorations, food, travel expenses, cards, and entertainment. 

Consider this scenario: someone waits until November or December to think about their holiday budget. By then, they've already committed to hosting three parties and promised their kids expensive gifts they saw advertised. Starting earlier gives you control over your spending decisions, rather than feeling locked into commitments you can't afford.

Our Credit Counsellors recommend that Canadians start setting aside a small portion of their income each month for holiday expenses. It's much easier to save gradually throughout the year than to try to save the full amount in just a few months. If you’ve already been saving, celebrate yourself! Otherwise, you can start now to set yourself up for success in next year’s holiday season. 

What If You Haven’t Saved Ahead? Try the ABC Method

But what if you’re already in the thick of the season and haven’t had a chance to save? That’s where the ABC Method (Analyze, Brainstorm, Change) can help:

• Analyze your current spending honestly. Look at what you’ve already committed to and how much income you have left this month.
• Brainstorm creative ways to cut costs, not value. Instead of buying multiple gifts for friends or colleagues, consider giving one thoughtful or sentimental item.
• Change your plans to reflect your budget. Instead of dinners and drinks out,  try a hot cocoa and walk through a decorated neighbourhood, or host a cozy holiday movie night with popcorn and snacks. These moments still create connection, without adding financial pressure.

2. Make a Gift and Expenses List You Can Stick To

Make a list of what you need to buy, and mark it off as you purchase. This prevents last-minute shopping and impulse buying that often contributes to holiday debt. 

You can use a spreadsheet or table like the one below to track your family holiday budget. It will help you stay accountable throughout the season to prevent overspending during the holidays. 

3. Shop Smart & Avoid Overspending 

Smart holiday shopping is about planning ahead and being intentional. Here's how: 

Start Early and Save More 

We tend to spend more when rushed. Start shopping sooner and slow down. This can help you both spend less and catch better sales.

Use Cash or Debit to Stay Accountable 

It's easier to stay on budget when you only have cash in your wallet, so consider leaving your credit cards at home. When you can physically see your money decreasing, you're more mindful about each purchase and less likely to engage in impulse buying. 

Another way to do this is to purchase gift cards for specific stores and only use those gift card amounts when shopping either in-store or online.

Shop Online Mindfully 

Digital shopping is convenient, but it makes overspending easier. Avoid the "free shipping" trap where retailers offer free shipping over a certain amount—this often leads to buying items you don't need just to qualify, and often results in you spending more than you would have if you just paid for shipping.

Another hidden driver of holiday overspending is the comparison trap. Social media is flooded with curated images of extravagant piles of gifts, designer décor, and perfect celebrations. It can be easy to feel like you’re falling short. Protect your mindset (and your budget) by muting or unfollowing accounts that leave you feeling like you're not doing enough. 

It’s also worth unsubscribing from marketing emails, especially during Black Friday and the holiday season, when retailers ramp up with their most tempting sales. Those “flash sale” or “limited-time offer” emails are designed to create urgency and spending pressure. If they’re not landing in your inbox, you might feel a lot less FOMO (Fear of Missing Out), and a lot more in control.

Consider Returning Items if You’ve Overspent

If you've gone over budget, whether from holiday excitement, pressure, or last-minute choices, it's okay to pause and review what you’ve spent. Check the return policies on items you’ve purchased, especially if some gifts were more about impulse than intention.

There’s no shame in making a return if it helps you stay on track financially. Your friends and family would much rather see you feeling secure and in control than stressed out over credit card bills in January.

4. Simplify Gift Giving 

Gift-giving doesn't need to strain your budget. Rethinking your approach can reduce costs while making the holidays more meaningful. There’s still time to get creative!

Everyone loves giving and seeing others happy with the gifts they receive. However, setting realistic expectations around gift-giving without feeling guilty is challenging for many. 

Give More Meaningfully 

The hardest part of a holiday budget usually isn’t the math; it’s managing expectations. Many of us overspend out of guilt, tradition, or fear of letting loved ones down. But gift-giving doesn’t have to come at the expense of your financial well-being.

One option is to focus your spending on a few people and give smaller or handmade gifts to others. Or, consider drawing names for a gift exchange so everyone receives one meaningful gift, rather than buying for the whole group.

Remember that it's the thought and creativity behind a gift that truly matters, not the price tag. Taking time to reflect on who you want to give to and what brings them the most joy can lead to meaningful gestures that don't cost much, like spending quality time together and showing that you care.

Start New Family Traditions That Cost Less But Mean More 

Start new traditions that don’t require you to veer into credit card spending or Buy Now Pay Later (BNPL) arrangements during holidays. Host an "appetizers and dessert only" gathering, or do a travelling party where each course is at a different house. Cut costs by sending emails or e-cards instead of expensive greeting cards.

This goes for gift-giving, too. Keep your kids' Santa list focused by setting a gift budget. Watch the stocking stuffers—go old-school with candy, an orange, or dollar-store items, like toothbrushes and stickers. For many, these can be more fun to receive than larger, more “significant” gifts.

5. Plan Holiday Meals in Advance 

Plan your holiday meals as part of your overall holiday spending so you can stay on budget. You can spread out the costs across the Christmas Eve party you want to host, the nice Christmas dinner, and New Year’s Eve. With smart planning, you can even use our grocery budgeting tips to avoid overspending on food. 

You can also host potluck dinners. When everyone brings a dish, it creates better variety and no one bears the full cost. 

6. Prepare for Next Year Now 

The best time to start planning your holiday spending for next year is right now, while this season is fresh in your mind.

Start a dedicated savings account and automate monthly transfers. Even $50-$100 per month adds up to $600-$1,200 by next December. Shop Boxing Day sales to get up to 75% off cards, wrapping paper, and decorations for next year.

One of the smartest ways to spread out holiday expenses is to create a budget for how much you'd like to spend at the beginning of the year, and then set aside one-twelfth of that amount each month. This approach not only makes saving easier but also allows you to take advantage of sales and grab popular items before they sell out.

And as you're looking ahead, don't forget about January itself. It's a month that often brings higher utility bills, annual insurance renewals, and the financial impact from December spending. A thoughtful holiday budget should make sure you’re covered for those regular expenses too, so you can start the new year feeling steady.

Get Support if You’re Feeling the Pressure 

Remember, the true meaning of Christmas is spending time with family and friends—not what's underneath the tree. 

If holiday spending or everyday budgeting has you stressed out, remember, Credit Canada is only a phone call away. And if you’ve tried to improve your financial situation on your own but aren’t yet seeing the progress you hoped for, we’re here to help. 

One of our certified Credit Counsellors will be happy to help you with your budgeting needs, as well as any other financial concerns you have. Just give us a call at 1 (800) 267-2272, and we'll set you up with confidential and free credit counselling. 

You can also chat with Mariposa, our AI-powered assistant, for personalized budgeting advice anytime at creditcanada.com.

Frequently Asked Questions

How can I budget for last-minute holiday expenses without going overboard?

Build a 5-10% buffer into your holiday budget for unexpected costs. If last-minute expenses arise, review your budget to see where you can adjust. 

What are some creative, low-cost gift ideas that still feel meaningful?

Looking to cut costs? These are good options that your friends and family will love: 

• Homemade gifts, like baked goods, photo albums, or crafts, show thoughtfulness without high costs. 
• Offer your time—babysitting, yard work, or teaching a skill. 
• Experiences,  like planned picnics or movie nights, often mean more than store-bought items.

How can I talk to my family about spending less?

Be honest and direct early in the season. Suggest a family meeting to set spending limits or draw names for exchanges. Frame it positively: "Let's focus on time together rather than gifts." Many people feel relieved when someone brings up reducing costs.

What tools can help me track my holiday spending more easily?

Use budgeting apps or a simple spreadsheet. Keep receipts and log purchases immediately. Credit Canada's budget planner can track holiday expenses alongside your regular budget.

What should I do if holiday spending leaves me in debt?

Stop using credit immediately and assess the damage. Create a debt repayment plan focusing on high-interest debts first. Contact Credit Canada for free counselling to create a realistic plan to pay off debt.