Navigating Holiday Expenses: Tips from Financial Experts

The holidays are a time for joy and celebration with friends and family, but they can also impose unwanted financial strain. From buying gifts, decorating, and traveling, it can be quite easy to overextend yourself. Unfortunately, this can also make it easy to lose sight of your long-term financial goals, such as saving for retirement or building an emergency fund.

In this article, we’ll share practical insights from financial professionals to help you stay on track during the holiday season. This includes the common mistakes people make, balancing short-term spending with long-term goals, and different ways to avoid overspending. You’ll also learn how a financial advisor can be a valuable resource in helping you maintain control over your cash flow.

Common Financial Mistakes During the Holidays

The holiday season is full of fun and excitement, but it also invites financial decisions you might regret later. With so much focus on enjoying the season, it’s easy to overlook key details like tracking your monthly spending or continuing contributions to your savings accounts.

Below are two major financial pitfalls people experience during the holidays, according to experts:

Not Having a Plan in Place

“The #1 mistake I see around the holidays is not having a plan,” says Mike Kern, CPA, founder of FreeBudget. Preparing for expenses, such as gift-buying and travel, ahead of time can protect you from unknowingly overextending yourself. “Having a predetermined budget before you begin your spending on holiday travel, shopping, and food can make the difference between a well-thought-out financial plan and a mountain of credit card debt,” Kern adds.

During the holidays, you feel both pressure and desire to give gifts. However, this can cause emotional decision-making if you don’t have a plan in place. By going into this time with a set budget for buying items for people, you’ll be able to avoid going overboard.

Using Debt to Overextend Spending

Using credit to cover expenses you can’t afford can put you in a bad spot during the holidays. Both credit cards and cash advances can carry very high interest rates. If you use these tools to cover discretionary costs, such as gifts, you’ll only end up putting yourself in a long-term hole financially.

Zach Bromley, a partner and financial advisor at Broadway Graham Wealth Partners, recommends “using cash or a debit card instead of credit” to manage your spending habits and avoid racking up credit card debt. With this strategy, you avoid feeling like you have more to spend and you won’t need to worry about paying a large bill at the end of the month.

If you do feel the pressure to spend a ton on gifts, it’s important to remember that the holidays aren’t always about material offerings. Instead, Bromley says that “focusing on the value of time spent with loved ones rather than the cost of gifts can help ease the financial burden.”

Balancing Short-Term Spending with Long-Term Goals

One of the key challenges during the holidays is balancing your need to spend today vs. your long-term financial goals, such as retirement or saving for a large expense. It’s easy to feel the pressure to spend money on various short-term costs, but it’s also important to ensure you remain on track.

According to Michelle Taylor, financial advisor and founder of Women in Wealth Initiative, “Determining what you can spend before you shop takes the emotion out of it” when you’re balancing short-term spending with long-term goals. “You can ensure that what you are spending is in alignment with those short and long-term goals and feel good about your purchases,” she says.

As an example of Taylor’s advice, you might set yourself a budget of $500 that’s exclusively for holiday gift shopping. If you already know you have that allocated, you won’t feel as squeezed by other expenses and contributions to retirement accounts.

Additionally, ensuring your savings are automated “can help curb the urge to spend more during the holidays,” explains Chad Gammon, CFP^®, owner of Custom Fit Financial. For example, you could set up a recurring monthly contribution to your Roth IRA or taxable brokerage account. However, be sure you have the funds in your bank accounts to make these transfers, otherwise you could experience an overdraft.

Gammon also shares that it’s helpful to “remind yourself that the savings are actually a long-term gift to your family.” Instead of seeing holiday spending as a nuisance or unnecessary expense, viewing it as a goal in its own right can help you feel more positive about your spending.

Getting Back on Track After the Holidays

Once the holiday season is over, it’s common to feel a mix of joy and financial regret, especially if you feel you’ve overspent. However, the start of the new year also presents a great opportunity to refocus and get back on track toward your goals.

“The good news about Thanksgiving and Christmas is that New Year’s is right around the corner. People often feel rejuvenated and ready to get their financial house in order,” says Kern. He recommends using this mindset as a springboard to “propel you forward to get a budget created and set goals” for the next year.

Bromley explains that refocusing and re-establishing “long-term goals, such as retirement savings or building an emergency fund, is important to regain focus and financial stability.” He adds that, if you stayed “within [your] budget, early 2025 is a good time to set new savings goals and plan ahead for future expenses.”

If you feel that you’ve overspent, however, you’ll want to take a more specific approach. Bromley suggests those who overextended their spending start by “reviewing their spending and addressing any debt accumulated during the season.” Additionally, he says it’s key to “create a plan to pay off debts quickly, focusing on high-interest balances first.”

Whether you found yourself overspending or if you feel that maintained a tight budget during the holidays, the start of the year is a great time to re-evaluate your goals.

How a Financial Advisor Can Help

Dealing with the financial stress of the holidays while keeping your long-term goals intact can be a challenge. The guidance of a financial advisor, however, can help you feel more like you’re on track and in control of your situation.

Professionals, such as those with either the Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC) titles, can assist in building a holiday budget and, if necessary, managing accumulated debt. Advisors can also help ensure you’re on track toward important objectives, such as your retirement, paying for a child’s education, or buying a home.

It’s crucial to work with a trustworthy advisor who operates under a fiduciary standard, ensuring your best interests are always their priority. If you’re unsure where to start, consider using this free advisor-matching tool to connect with a qualified professional who aligns with your goals and needs.