How To Set Financial Boundaries Around The Holidays

It's tempting to overspend during the holidays.
It's tempting to overspend during the holidays.

It's tempting to overspend during the holidays.

The holidays are an exciting time for parties, sweet treats, shiny decor and family gatherings. Of course, this season is also the busiest time of year for shopping.

“While this time of year is often associated with joy and celebration, it can also bring about financial stress and anxiety,” said Kara Stevens, author of “Heal Your Relationship with Money” and founder of the Frugal Feminista. “Maintaining financial boundaries during the holiday season is crucial for several reasons.”

Stevens emphasized that it’s important to resist the temptation to overspend so you can avoid accumulating debt, foster healthy relationships, minimize stress and model financial responsibility.

“It’s easy to get swept up in the excitement of the holidays and spend money without thinking about the consequences ― but setting clear boundaries will keep your financial goals top-of-mind,” said Jacqueline Howard, head of money wellness at Ally Bank.

HuffPost asked Howard, Stevens and other experts about the best practices for establishing and maintaining financial boundaries around the holidays. Read on for their advice.

Set a budget in advance.

“I think it’s important to decide on a holiday budget well in advance of the holiday season ― this can include travel, food and gifting expenses,” said Samantha Gorelick, managing financial planner at Brunch & Budget. “Some folks save all year long for the holiday season, but if you didn’t prepare that far in advance, decide now on an amount you will spend and try your best to stick with it.”

Setting clear limits for different holiday spending areas will help you avoid making impulse purchases. Set a budget based on your income and expenses and stick to it. If you need to spend more on something, cut back in other areas to balance it out.

“Add it all up and ensure you don’t go over the entire amount,” said Jason Beckett, founder of Beckett Financial Group. “While gift giving and charity donations can make you feel good during the holiday season, you shouldn’t be spending money you didn’t plan to spend. Doing so can cause you to derail your long-term savings goals.”

Make a list (and check it twice).

When it comes to gift giving, you might want to get more granular with your budget and shopping plans. Identify everyone to whom you plan to give a gift.

“Put the amount you are willing to spend next to each item and/or person before you start shopping, and please, please update it in with your actual spending as you go,” said Anne Lester, a retirement savings expert and author of the upcoming book “Your Best Financial Life.”

She emphasized how easy it is to spend beyond your means, particularly in this era of apps and browser extensions that effectively gamify the process of purchasing expensive items and experiences.

“It’s important to set realistic and effective boundaries that will make you consider if the thing you are about to get for yourself or someone on your list is really something that is needed ― or even truly wanted,” Lester said. “A list is a great way to keep yourself accountable in real time.”

Get creative.

“Try achieving your gift giving goals by thinking outside of the box,” said Patrick Yono, founder of Sure Life Financial. “Your family members or friends might be just as happy with a $25 gift as they would with a $50 gift, so be creative with your budget in mind.”

Look for lower-cost gifts that pack a punch, or think about other ways to supplement a less expensive item.

“With high rates of inflation, don’t feel shame if your holiday season might look different than years past,” Howard said. “There might be less gifts under the tree, but maybe they’re more meaningful this year ― like a coupon book for your significant other or spending time with your family on a service project. We should all extend a little more grace this holiday season when it comes to spending.”

Start new traditions.

“If you’re vocal about the way spending depletes your funds and throws you off from reaching your financial goals, you’ll get support in your family,” Stevens noted. “Be brave and encourage your family members to create non-spending traditions like no-spend Christmases, or make regifting OK. Or, better yet, figure out ways that your family could work together to build wealth.”

Communicating your needs and brainstorming with your family can bring everyone closer. Your loved ones may also help you in other ways.

“Share your financial boundaries and goals with a trusted friend or family member who can provide support and hold you accountable,” Stevens suggested.

Don’t play the comparison game. 

As the saying goes, comparison is the thief of joy. But the internet and social media have made it all too easy to fall into that trap.

“The holidays might be a good time to get offline ― not only to be more present with friends and family, but also so you don’t feel like you’re constantly comparing your holiday to others,” Howard said. “When we compare our experiences to others, we lose our financial values and tend to overspend when we might not be in the place to do so.”

Don't fall into the trap of comparing your holidays to what you see on social media.
Don't fall into the trap of comparing your holidays to what you see on social media.

Don't fall into the trap of comparing your holidays to what you see on social media.

Be mindful about your values.

“I think one of the reasons that it becomes easy to violate or ignore financial boundaries is because of the value we’ve been taught spending and overspending on gifts means, as it relates to showing care and showing love,” Stevens said. “In other words, we’ve been taught by the media and our peers that spending equals love, when that’s not necessarily true.”

Take the time to consider the beliefs and values you developed growing up, and whether you want to carry them into your holiday spending as an adult.

“Before heading to the store, it’s important we understand our values of money and the purpose of spending,” Howard said. “Is it to give your kids all of the most popular gifts of the season because you missed out on them as a child? Or are you replacing quality time with physical items to make up for a busy work schedule?”

Once you’ve identified the reasons behind your spending and whether they align with the beliefs and values you want to be part of your life, you can create a mindful “values-based” holiday spending plan.

“With my own family, we discovered our values were giving back and spending time with nature,” Howard said. “For Christmas, we’ll celebrate by purchasing gifts for a family in need and taking a family vacation to a beach. Additionally, each of my kids will receive up to three gifts and one of the gifts will be something that can be used on vacation.”

Avoid emotional spending.

“When it comes to setting financial boundaries this holiday season, be hyper-aware of emotional triggers, social pressure, [fear of missing out] and today’s gift-giving culture,” Howard said. “If you are overspending, explore where you learned this behavior and dig for the root issue behind the spending.”

Emotional spending can be a big problem around the holiday season, which tends to bring up childhood memories and a sense of pressure to achieve Hallmark-style “perfection.”

“If you feel a rush from shopping, understand your purpose of spending,” Howard said. “Protecting yourself from yourself might look like knowing exactly what gifts you’re buying for others, or only shopping online to reduce extra purchases in store.”

Prepare to save after the holidays.

If you want to spend a little more around the holidays, try to compensate by saving more in the aftermath.

“A good method of handling the added expense of the holidays is to save it forward,” Yono said. “The winter season is a great time to save money by going out less and spending less. So, after the holidays, make a conscious effort to spend less than usual for a couple of months to make up for any overspending during the holidays.”

Think about your future self. 

If you find yourself on the verge of spending beyond your budget, Lester recommended thinking about all the things you could do in the future with that cash instead.

“Think about the dreams you are working towards and how the decision of saving that money today instead will help you get there faster, instead of spending it on a portable monitor or a spin scrubber on TikTok Shop, no matter how many coupons they give you!” she said. “I can’t emphasize enough how important it is to think about taking good care of your future self as well as your current self.”