Three ways to decorate for the holidays without blowing your budget

Between gifts, travel, and food, the holiday season can be the most expensive time of the year. Many Americans expect to spend an extra $1,000 during the holidays. With a bit of planning and the right tools, though, you can still enjoy the celebrations without straining your finances.

Whether your goal is $1,000 or just $100, Ally Financial suggests thinking through your budget carefully to help you stay on track and reduce holiday stress.

Key takeaway:

• Many Americans estimate they will spend about $1,000 on gifts and other holiday expenses, and dividing that amount into monthly savings targets can make the goal feel more manageable no matter when you begin.

Step 1: List everything, then review it again

To work out how much you want to spend, start by identifying every category you may need to cover. Your list might include:

• Gifts
• Decorations
• Travel
• Meals
• Parties or hosting
• Donations

After you have a broad outline, assign a specific amount to each category. For example, if you are not traveling far, you might choose to put more money toward gifts or decorations. Setting separate savings buckets for each category can make it easier to track progress throughout the season.

Once you total the categories, divide the overall amount into monthly savings steps. For instance, if your holiday spending goal is about $1,000, you could aim to save $250 a month over four months.

Step 2: Cut costs without cutting the holiday spirit

Now that you know what you need to save, look for places where you can trim spending and redirect that money toward the holidays. Possibilities include:

• Replacing takeout or restaurant meals with home-cooked dinners
• Putting a pause on subscriptions you barely use
• Brewing coffee at home instead of buying it out
• Hosting a potluck rather than paying for catering
• Making holiday cards yourself instead of ordering custom ones
• Choosing a free community event, such as a tree lighting, holiday market, or library story time, instead of a paid outing

Every dollar you reroute brings you closer to your target.

Step 3: Build your holiday savings buckets

This is the part that can make the process easier. Once you know your target and where the money will come from, set your savings on autopilot.

Give each bucket a target amount and deadline, and rank them by what matters most to you. Seeing your goals clearly named and growing can help keep you motivated.

If you want a more interactive view, use a savings goal calculator to see how long it may take to reach your targets.

Rethink gift giving

There is more than one way to show you care during the season. Some of the most meaningful gifts cost little or nothing at all. If presents take up a large share of your holiday budget, consider these alternatives:

• Give experiences instead of objects: A home-cooked meal, a movie night, or a DIY craft session can mean more than something bought in a store.
• Keep it simple for hosts and coworkers: Cookies or a nice bottle of something can be thoughtful, useful, and affordable.
• Share the cost: Team up with family on a group gift, or organize a gift exchange so each person buys only one present.
• Give cash or a gift card: It is often exactly what someone wants and can help you avoid overspending on the wrong item.

Thinking about gifts beyond the holidays? Here is how much to spend on gifts for any occasion.

Make the season joyful, not stressful

When your savings tools are working behind the scenes, you can focus on what really matters: the people, the memories, and the moments that make the season special. Start early, automate what you can, and let your savings buckets grow. And if you do overspend, there are steps you can take to recover and reset your budget for the new year.