5 Holiday Spending Habits To Quit ASAP To Save You Stress & Money

'Tis the season for shopping. Will you be nice or naughty and wake up with a financial hangover when bills arrive in January? 

According to NerdWallet's 2024 Holiday Spending Report, Americans expect to spend $17 billion more on holiday gifts this year than they did last year. While that's good news for retailers, financial advisers will no doubt shake their heads as 28% of shoppers surveyed who used credit cards to pay for gifts last year are still paying off their balances. Ten percent of those polled said they will likely need to tap some of their emergency savings to buy gifts, and 9% said they'll prioritize gift buying above paying some of their regular bills. 

It is easy to overspend during the holidays if you go into the season blindly. 

"Create a list of the people you want to buy gifts for, the activities you want to participate in, and any other expected expenses for the holidays," says Phoebe Story, a financial adviser and partner at Northwestern Mutual.

Then, develop a spending plan that utilizes last year's spending as an estimate, to give yourself a realistic starting point. 

Another bad habit is putting all your expenses on your credit card without having a strategy for paying the bills. "If going into debt over the holidays has become a habit, consider committing to going all-cash for the holiday season," says Story.

"The true value of money is not in the things it buys but in the experiences and memories it creates. Instead of defaulting to pricey gifts, think about what would genuinely resonate with your loved ones," says Tom Matthews, a certified financial educator and author of How Money Works.

Guilt gifting is among the worst. You have a set amount of money that you are willing and able to spend on presents, but suddenly you're seized with the feeling that it's not going to be enough; the recipient will be disappointed. So instead of sticking to your original plan, you add to the gift. A $30 sweater becomes a $75 outfit. 

With the hectic holidays, convenience has appeal. However, Chris Heerlein, CEO of REAP Financial, says buying convenience, especially prepackaged holiday solutions like ready-made gift baskets, catered meals, or expensive holiday décor bundles can be a bad idea. 

"On the surface, these convenience buys seem harmless. You are paying for something that saves time and effort, right? But when you break it down, these purchases often come with a massive markup," he says.

For example, a gift basket might cost $80 at a store, but when you look closer, it includes $30 worth of items you could easily pick out yourself. This adds up fast. 

The antidote to convenience spending is preparation. Start your holiday planning early, whether it is meal prep, gifts, or decorations. For example, instead of splurging on a $100 pre-decorated wreath, buy a plain one for a fraction of the cost and customize it yourself. Not only will you save money, but you will also have something more personal and creative. 

For sure shopping can get out of control during the holidays, especially if you give in to impulses and emotions. While you should create a list before you shop, also keep a list of all your expenses as you make holiday purchases.