Top 6 Ways to Save This Holiday Season

I swear that every year I see ads for the holiday shopping season show up earlier and earlier. Pretty soon we’ll be thinking about what to buy for holiday gifts right after July 4^th! Well, once again the holidays are right around the corner with Thanksgiving coming up soon. While I love this time of year and the opportunities it gives me to spend time with friends and family, it can really be a drain on my bank account after it’s all over. Is it worth it? My answer is absolutely and I’m happy to spend money on gifts and travel to make the most out of this special time of year. However, I’m not going to break the bank this year as I’ve rounded up my top tips on how to save money going into the holidays so I start next year fresh with my savings still intact. According to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households, nearly 36% of adults would struggle to cover an unexpected $400 expense — making holiday budget planning more important than ever.

1. Sit Down and Set a Budget

I know, you probably already have a budget and if you’re reading this you already look for tips on how to save money. Take a minute now and sit down to think about a budget just for this holiday season. Make a list of all the different things you will be spending money on. As an example, here is my short list:

1. Travel to Thanksgiving

2. Travel for Christmas and New Years

3. Gifts for each of my immediate family, and smaller gifts for extended family

4. Food for our office holiday party

5. New clothes (I need to look sharp on my trips)

6. Gift wrapping and shipping

As you can see, if you break down each category of what you anticipate your spending will be you can accurately set a budget for how much you will spend in total and how much you’ll spend on each holiday category. Don’t fall into the trap of setting a budget too high — being realistic is important at this stage. Look at your regular monthly budget and then set a price so you are spending within your means. Tools like the CFPB’s free budget worksheet can help you map out your full financial picture before the season begins. Tracking your debt-to-income ratio (DTI) at this stage is also wise — if your existing monthly obligations already strain your income, your holiday budget should be scaled back accordingly.

Sources: Gallup Holiday Spending Survey; National Retail Federation Holiday Spending Data.

2. Think About What You REALLY Need to Spend Money On

But I already set a budget like you told me to, you might be thinking. Well, now is your chance to make sure you don’t overspend. It’s very easy to convince yourself to spend more than you can afford because you’re spending this money to make your friends and family happy. Think hard about who you’re buying gifts for and how much you are expected to spend on them. Sometimes it’s okay to just send a card instead of a gift, or maybe a smaller gift than you typically would send. Really, it is the thought that counts after all. Take stock of how many holiday parties you’ll be going to and find out if you are expected to bring anything, and if so what you will bring. Think about your coworkers and whether you’ll be getting gifts from them. If they’re giving you something you should return a gift but maybe think about doing baked goods or smaller gifts like gift cards for coffee. Finally, if you have kids find out very early about what it is they’re looking to get for their holiday presents. They’re probably thinking about it way before you are so get an expectation of what you’ll be buying and what you think is too expensive so you can build a budget for their presents that will make both of you happy.

3. After You Budget, SAVE

This step is pretty self explanatory, but you need to start saving early for your holiday season. Personally, I start saving January 1^st for the next holiday season by setting up an automatic deposit from my checking account into a separate holiday savings account each week. By socking away $5–$10 a week you can quickly build up a nice pool of money that you can use to pay for all of your holiday expenses without dipping into your emergency fund or going into debt on your credit cards. Many banks and credit unions — including online banks like SoFi — offer dedicated savings sub-accounts with no minimums that are perfect for this strategy. The FDIC insures deposits at member banks up to $250,000 per depositor, so your holiday fund is protected no matter where you keep it — you can verify your bank’s FDIC membership at the FDIC’s official bank finder tool.

If this is your first year setting a budget for the holiday season you can use this budget as a guide for roughly how much you’ll need next year as well. Whatever that amount is, set your weekly savings amount and let it go on autopilot until the holidays roll around again next year.

4. Get Rewarded for Your Purchases

If you tend to do a lot of your shopping at the same stores, then make sure to sign up for their reward programs. Just by shopping you can get a percentage of your total purchase back, qualify for extra discounts, and even get free stuff! Major retailers like Target (Circle), Amazon (Prime), and Walmart (Walmart+) all offer loyalty programs that can meaningfully reduce your out-of-pocket costs over a full holiday shopping season, according to Consumer Reports’ loyalty program analysis.

You can also consider using what I call the gift card strategy. When shopping at your typical store buy a refillable gift card and each time you go to the store add a few dollars to that gift card. By adding $10 or $20 here and there you can quickly build up a pool of cash that you can use for your holiday purchases. It’s a modified version of the automatic savings account I described above. Stores like Kroger and Safeway even offer fuel points when you buy gift cards, so you’re earning two rewards at once.

5. Get Rewards Credit Cards

I’ve been saying over and over not to go into debt for your holiday purchases, but if you use a credit card responsibly and plan ahead you can take advantage of generous sign-up bonuses on a new credit card and get points for your purchases. This year I knew I was going to travel from North Carolina to Seattle, Washington for a holiday get together with friends and family so I started looking for credit cards with generous sign-up bonuses. I found a new card that waived the annual fee for the first year and gave me enough airline miles to fly to Washington for free! Similarly, I signed up for some amazing store-branded credit cards for the stores I typically shop at and scored significant discounts on my larger holiday gift purchases.

Cards like the Chase Sapphire Preferred and several co-branded airline cards routinely offer sign-up bonuses worth $500–$1,000 in travel value when you meet a minimum spending threshold in the first few months. Before applying, it’s smart to check your FICO Score through a free service like Experian’s free credit score tool — premium rewards cards typically require a score of 700 or higher. Keep in mind that each new card application triggers a hard inquiry, which can temporarily lower your FICO Score by a few points according to myFICO’s credit inquiry guide.

Since I was saving all year for my holiday purchases I knew I had the money to pay my card balance in full so I was getting points and savings all while just using up my holiday budget. Just be careful not to overspend and blow your budget — the CFPB’s credit card market data shows that average credit card APRs have exceeded 20% in recent years, and carrying a balance at that rate can quickly wipe out any rewards you’ve earned.

6. Take A Last Minute Financial Break

Let’s say you’ve saved all year, you’ve set your budget and you’re still going to come up a bit short of what you think you’ll need to cover your holiday expenses. What do you do now? Well, one option is to set yourself on a financial break. Choose an amount of time, at least a week, and don’t spend anything. It’s quite difficult, but if you plan ahead you can make it happen by not purchasing anything unnecessary, cooking your food for the week at home with what you have in your pantry, find entertainment for yourself at home and just save that extra money. You can quickly stash a hundred or even a few hundred dollars by going on a financial break and use that money to top off your holiday budget and make the most of your holiday season. The Bureau of Labor Statistics’ Consumer Expenditure Survey shows that the average American household spends roughly $330 per month on food away from home alone — cutting that for even one week is a meaningful saving that goes straight toward your holiday fund.

Frequently Asked Questions

How much should I budget for holiday spending?

Most financial planners recommend keeping total holiday spending at or below 1.5% of your annual gross income. For a household earning $60,000 per year, that’s roughly $900. The National Retail Federation reports the average American spends approximately $875–$1,000 on gifts alone, so factoring in travel, food, and other costs is essential when building your total budget.

When should I start saving for the holidays?

The best time to start saving for the holidays is January 1st of the same year. By saving a small, fixed amount each week through an automatic transfer into a dedicated savings account, you give yourself a full 12 months to accumulate funds without feeling the pressure of a lump-sum expense in November or December. Even $10 per week produces a $520 fund by year end.

Is it a good idea to use a credit card for holiday shopping?

Using a rewards credit card for holiday shopping is a good strategy only if you can pay the full balance before the due date. Rewards programs can return 1%–5% cash back or more in points and bonuses. However, the CFPB warns that average credit card APRs now exceed 20%, meaning carrying even a modest balance quickly erases any rewards earned and puts you into debt heading into the new year.

What is the gift card savings strategy for the holidays?

The gift card savings strategy involves purchasing a refillable store gift card and adding small amounts — typically $10–$20 — to it each time you visit a retailer throughout the year. By the time the holiday season arrives, you’ve built up a cash pool at that store without feeling the financial impact of a single large purchase. Some retailers also award bonus loyalty points or fuel rewards when you buy gift cards, effectively doubling your benefit.

How do I avoid going into debt during the holidays?

Avoiding holiday debt requires three core habits: writing a firm budget before you spend a single dollar, starting to save early so you are spending money you already have, and refusing to rationalize purchases that exceed your budget. The CFPB recommends tracking every purchase in real time and setting category-level spending caps. If you use a credit card, treat it like a debit card — only charge what you have cash to cover immediately.

What is a spending freeze and how does it work?

A spending freeze is a defined period — typically one to two weeks — during which you commit to zero discretionary spending. You eat only from your pantry and freezer, skip entertainment purchases, and avoid any non-essential shopping. A disciplined one-week spending freeze can save a typical household $100–$300 in discretionary costs, providing a meaningful top-up to a holiday budget that is running short.

Do store loyalty programs actually save money during the holidays?

Yes — when used consistently, store loyalty programs offer measurable savings. Programs at major retailers typically return 1%–5% of total purchases in points or cash back, and many offer bonus multipliers during the holiday season. According to Consumer Reports, the key is to consolidate your shopping at fewer stores so your points accumulate faster rather than spreading small balances across many programs.

How does a holiday budget affect my credit score?

A holiday budget itself has no direct impact on your FICO Score. However, the spending habits that result from poor holiday budgeting can. Maxing out credit cards increases your credit utilization ratio — a factor that accounts for roughly 30% of your FICO Score according to myFICO. Keeping utilization below 30% during the holiday season protects your score even if you’re spending more than usual.

What is the best type of savings account to use for a holiday fund?

A high-yield savings account (HYSA) is the best vehicle for a dedicated holiday fund. As of early 2026, many online banks including SoFi and others offer HYSAs with APYs significantly above the national average of 0.46% tracked by the FDIC. Keeping holiday savings in a separate, named account also reduces the temptation to dip into the funds early.

Should I open a new credit card just for holiday spending?

Opening a new rewards credit card specifically for holiday spending can be worthwhile if the sign-up bonus is large enough and you are confident you will pay the balance in full. However, each application causes a hard inquiry on your credit report that can temporarily lower your FICO Score by 5–10 points according to Experian. Apply no more than one to two months before your main spending period so the bonus posts in time and the inquiry impact is minimal.