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If ever there’s a month that will derail your budget, and your savings plan, it’s December. Holiday get-togethers, gifts, meals, events, and decorations add up for even the strictest budgeter, including those who plan to buy a home in the new year.

Yes, homeownership beckons, but so do family traditions and gift-giving occasions. That’s why you need a strategy for continuing to save, even when the pressure to spend is on.

“Keep your eye on the prize,” says Joe Pessolano, a branch sales manager with Fairway Independent Mortgage Corporation in Garner, N.C. (Fairway owns Home.com). “A new home is a long-term investment, while many of the luxuries that we desire around the holidays, although nice, only bring joy in the short-term.”

To help you stay focused, we’ve put together a list of tips on how to avoid overspending and keep saving for a house during the holidays.

What's in this Article?

Make a budget and check it twice
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Don’t spend your year-end bonus on the holidays
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Reduce your gift-giving list
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Get resourceful with your giving
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Earn cash back
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Track your spending
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Have the tough conversations
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7 ways to avoid overspending during the holidays

One of the most helpful things you can do, though, is to think about why you’re sticking to a budget this holiday season. Buying a new house is a huge purchase, one that can have long-term positive financial effects for you and your family.

Whether you’re a first-time homebuyer, purchasing a new house as your family expands, or downsizing as you enter a new stage of life, this is a major milestone and you don’t want to sacrifice it for one holiday season.

Besides, if you use these tips to avoid overspending, you won’t be sacrificing much at all. Sure, you might buy fewer gifts or have to get a little creative. But you can still celebrate and enjoy your favorite traditions — you’ll just be more mindful of how much you spend as you do it.

Related reading: New Year’s Resolution: Reach Your 2022 Homeownership Goals the SMART Way

Make a budget and check it twice

To avoid overspending during the holidays, decide how much you can afford to spend on all of your holiday expenses and adhere to it closely.

“Stick to your savings plan. Don’t feel the pressure of buying the expensive gift,” says Jeff Satre, a branch manager with Fairway in Ashburn, Va. “Sometimes the best gift is from the heart, and the cost is irrelevant.”

Whatever you do, avoid dipping into your house savings to cover holiday costs.

“Do not use your saved funds for other expenses unless there is an emergency need,” Pessolano says. “Dipping into the saved funds can seem like a simple solution, but it can lead to heartache and delay in achieving your dream of purchasing your new home.”

“Dipping into the saved funds can seem like a simple solution, but it can lead to heartache and delay in achieving your dream of purchasing your new home.”

Joe Pessolano, branch sales manager with Fairway

Adam Garcia, owner of The StockDork, suggests taking out cash for your holiday expenses if you’re worried about spending beyond your budget.

“Withdraw the total in cash and divide it into equal weekly parts. In fact, ban the use of any other form of payments for a while. This will make you less likely to overspend,” Garcia says. “There will be way too many temptations in this period and using a card or other online payment methods will make it way too easy to overlook how you’re missing out on the new house of yours.”

Don’t spend your year-end bonus on the holidays

If you receive a holiday bonus or an annual wage supplement (also known as the “13th month payment”), put that toward your future home rather than holiday expenses.

“Invest your 13th month and Christmas bonus to have another source of cash flow for your house-buying fund,” says Joshua Blackburn, founder of Evolving Home. Seize this opportunity of having money to spare and make sound investments that will eventually allow you to buy a house faster.”

“Invest your 13th month and Christmas bonus to have another source of cash flow for your house-buying fund.”

Joshua Blackburn, founder of Evolving Home

Blackburn says you don’t have to take an all-or-nothing approach to your bonus. You might allocate some for an extra treat for your family, he says, while putting the rest toward your home. The important thing is that you be strategic about your savings, because the home you buy will bring your family benefits far longer than any holiday splurge.

Reduce your gift-giving list

If your friends and family are open to it, suggest new traditions this year, such as skipping gifts in favor of everyone cooking a meal or planning a unique outing together. This is one way to avoid overspending during the holidays.

Or, trim your list by suggesting a Secret Santa, says Zach Reece, a certified public accountant (CPA) and chief operating officer at Colony Roofers in Atlanta.

“Secret Santas are perfect for two key reasons,” Reece says. “First, everyone receives a gift so nobody feels left out. Second, you can set a maximum gift price so that you know for sure how much money you’re spending during the holidays.”

When setting the price limit, be honest if someone suggests a number beyond your budget. The goal is to participate in a fun game, not to add stress. Tell them you’re saving for a home, so you can’t spend as much as usual, but that you’d still like to be part of the tradition.

Get resourceful with your giving

Rather than buy brand-new items for everyone on your list, consider homemade or secondhand gifts. A handcrafted ornament or fresh baked goods can mean a lot more than a hastily-purchased present, and they’ll help you avoid overspending, too.

If you don’t have the time to make something handmade, check out local thrift and consignment shops. You might find unique home goods or clothing that will make great gifts for your loved ones for a lot less than you’d spend buying new.

Visit secondhand bookstores as well. You can often find interesting books and old-school games, puzzles, and media that will surprise and delight your friends and family.

Earn cash back

Unless you’re opting out of all holiday traditions, you’re probably going to spend some money. So why not earn a little back while you do? Phil Ganz, a senior loan officer with Fairway, recommends using Apple Pay to earn cash rewards, if you’re an Apple user.

If you have credit cards with cash back bonuses, use them strategically when buying groceries, fueling up, or purchasing gifts or decorating materials. See if your cards have any discounts or bonuses for shopping with particular vendors as well.

You might also try using coupon or cash back sites such as Rakuten to earn a percentage back on your online shopping. Every little bit counts when you’re saving for a house, so look for deals and rewards wherever you can.

Track your spending

“Check your accounts daily,” Ganz advises. “People save better when they’re more aware of their situation.”

It may sound tedious, but even a brief daily scan of your account balances and transactions can tell you whether you’re on track. With prices of many goods rising this year due to inflation, it’s all the more important to monitor your spending and make sure you continue saving for your down payment.

Have the tough conversations

In fact, have several of them.

“It is probably unrealistic to think you’ll have one discussion with immediate and/or extended family about changes, and everything will be great,” says Tanya Peterson, vice president of brand at Freedom Financial Network. “It may be smart to start by suggesting and implementing small things that work toward your goal.”

Peterson suggests coming to conversations with family and friends prepared with suggestions for what you could do together to replace costly gifts and activities. For instance, she says, you might create a video to send to family rather than sending a bunch of gifts.

“The idea is not to have a bleak holiday, but a more meaningful and fun holiday,” she says.

Part of that could be involving others in your community in establishing new traditions or activities.

“If you are cutting back on gifts for friends and neighbors, for example, you can explain that you are working to create a more relaxing, meaningful holiday,” she says. “You may be able to suggest a charitable project for the neighborhood, from putting together care packages for American soldiers who are away from their families to arranging participating in a local community service activity (all socially distant). Others may be grateful for the change, too.”

Think about the new year now

Figuring out how to avoid overspending during the holidays is tough. There’s often a whirlwind of activity, and people often feel stressed or burned out, both of which make it difficult to focus on budgeting and saving.

But if you can, think about Jan. 1 and about your homebuying goals. That can be a North Star to follow when you’re feeling pressure to spend.

You can also start planning now for how to get your budget in place come the new year.   

“Even though you may not be able to save while spoiling those you love for the holidays, get on a budget now so that when the holidays are over, you can start saving and appropriate funds to your gift — the home of your dreams,” says Michael Graber, a branch manager with Fairway in Montvale, N.J.

"Even though you may not be able to save while spoiling those you love for the holidays, get on a budget now so that when the holidays are over, you can start saving."

Michael Graber, branch manager with Fairway

And if all the talk of budgeting and cutting back is stressing you out, Peterson suggests focusing on the positive.

“Keep the focus in any discussion on what you want the holiday to be, versus how you want to cut back, rein in spending, or eliminate certain activities,” she says. “In order to do that, you need to be clear on what kind of holiday you want to create. It may be that you want to do things together as a family, spend time in your own way resting and relaxing, or become more involved in community or charitable activities.”

One other great motivator? Picturing how you’ll spend the holidays next year in your brand new home.


The information in this article does not constitute financial planning advice. Please consult a financial planner regarding your specific situation.

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