The winter holidays are here, and with them comes a crush of expenses.

“A lot of people want to do something nice for their families,” says Diane Kessler, director and senior wealth advisor with Citi Wealth Management in Bethesda, Maryland. “They want to be generous.”

But being generous can put a damper on the holidays if you find yourself short on money for bills or facing a mountain of debt after the new year. In fact, more than 70% of Americans who celebrate the winter holidays say they feel stressed about their expected spending, according to a survey of more than 1,000 adults by financial services firm D.A. Davidson.

You can, however, minimize the possibility of overspending by following these tips to avoid holiday financial stress.

1. Set Your Intentions

Before you do anything else, take stock of what the holidays mean to you and why you want to celebrate.

“People feel like, no matter what, they have to participate,” says Cary Carbonaro, a certified financial planner and senior vice president with financial firm ACM Wealth.

Rethink whether you need to do everything – and buy everything – that you have in the past. Maybe you really don’t enjoy the company holiday party and can skip going entirely. Or perhaps you feel obligated to go but can choose not to spend money on a new outfit for the evening.

Select the events, activities and gift exchanges that are most meaningful to you and don’t be afraid to reduce the time and money you devote to everything else.

2. Create a Budget

Once you’ve decided what is most important, it’s time to determine how much those items will cost and plan for the expense.

“The best way to minimize the possibility of overspending during the holiday season is to abide by the same advice you do year-round: Stick to your budget,” Courtney Mitchell, head of consumer deposit products and payments at TD Bank, said in an email.

Seven in 10 people do expect to make a budget this year, according to the 2023 Merry Money Survey from TD Bank. However, that may be the easy part. Ninety-six percent of shoppers who responded to the survey also said they expect to overspend on gifts.

3. Make a List

One way to avoid overspending on gifts is to make a list of all recipients and how much you have budgeted to spend on each person. Once you reach that limit, stop spending. If you find a last-minute perfect gift that you must have for someone, return what you previously purchased for them to stick to your budget.

“It’s also critical to discuss this budget with your significant other if you share your finances,” Andrew Crowell, a financial advisor and vice chairman of wealth management at D.A. Davidson, said in an email. “Make sure you’re aligned on who you will be buying gifts for and how much you’re able to spend on those gifts.”

4. Don’t Overlook Common Expenses

Gifts are only part of the holiday spending equation. There is also food, clothing, charitable donations and incidental expenses, such as parking.

“Although gift giving for family and friends is often top of mind during the holiday shopping season, many people tend to overlook the extra expenses,” Mitchell said. “In trying to create the perfect holiday experience, people underestimate the amount of money they spend on festive holiday events.”

The 2023 Merry Money Survey found that people were most likely to overspend in the following categories:

  • Dining out with family and friends: 55%.
  • Entertainment such as concert and movie tickets: 39%.
  • Travel: 32%.

5. Look for Alternative Gifts

Overall, people expect to spend considerably less on non-gift holiday expenses this year, according to a survey of more than 3,000 people by PYMNTS Intelligence and ic2. Respondents say their non-gift spending will drop to about $860 in 2023 compared to $1,160 in 2022.

Gift spending isn’t declining, however, and is expected to rise 2.2% overall, according to the report. With gift spending making up the bulk of many people’s holiday costs, a key strategy to reduce financial stress may be to reduce the number of gifts you give.

“Sometimes, we can have a cookie or dessert exchange with friends,” Kessler says.

Perhaps you swap out individual gifts for a single experience that a larger group can enjoy. Selecting names for family and office gift exchanges is another tried-and-true method for reducing gift costs.

6. Shop the Sales

When you are ready to spend, be on the lookout for options to save money.

“There are a million ways,” Carbonaro says. They include taking advantage of credit card rewards, online cash back sites like Rakuten, coupons and sales. If you need new clothes, consider a rental service like Rent the Runway or decide if you can get by with something in your closet or a cheaper outfit without a designer label.

Also, keep in mind that not all shopping strategies work for all people.

“Be honest with yourself about your spending tendencies,” Crowell said. “If you tend to overspend, using a debit card (rather than a credit card) for holiday spending may be a wise choice for you.”

7. Know When to Stop

Every year, the holiday shopping season seems to start earlier. While that can give you extra time to budget and hunt for deals, it also comes with the risk that you may keep spending long after you’ve crossed everyone off your list.

“Once you set your holiday budget and begin shopping, it’s smart to set a reminder to check in and review your spending,” Mitchell said.

If you find yourself tempted by the promise of one more spectacular deal, be deliberate about staying out of the stores and off your favorite retail websites. Also, don’t open sale emails and unsubscribe from promotional lists.

8. Have a Plan for Paying Off Purchases

The PYMNTS/ic2 survey found that the majority of holidays shoppers – more than 60% – plan to use credit cards for their purchases. Another quarter expect to use “buy now, pay later” options.

“I’m OK with people charging things as long as they have a plan to pay it off quickly,” Carbonaro says.

Ideally, you’ll want to pay off the balance before any interest charges are assessed, and using a holiday bonus or end-of-the-year commission might be one way to do that. If you have to carry a balance, Carbonaro urges you to pay that off by March at the very latest.

9. Regroup After the New Year

If you find yourself stressed about finances even after following these tips, use the new year to reflect on what went wrong – and how to do better next year.

“I think January is a great time for people to plan,” Kessler says. “Instead of a resolution, how about we have goals?” For instance, someone could make a goal to save $1,000 for the holidays and then set aside $100 a month.

Kessler also suggests those who work financial planners speak with them about holiday budgeting. While we often think of these professionals as focused on retirement planning and wealth building, they are equally able to help clients with budgeting and cash flow issues.