Start with a total holiday budget that accounts for gifts, travel, food, entertainment, and other seasonal expenses.
Spreading purchases over several months doesn't necessarily mean spending less — track your spending to make sure you stay within your overall limit.
Use the extra time to plan and compare prices, rather than letting sales, limited-edition products, or holiday pressure lead to impulse purchases.
It may feel a little early to start thinking about holiday gifts, but retailers are already getting shoppers into the holiday spirit. Advent calendars and other seasonal products are hitting shelves months before the holidays, giving consumers more time — and more opportunities — to spend.
Starting early isn't necessarily a bad thing. Spreading out purchases could make holiday expenses easier to manage, especially for shoppers who plan ahead. But a longer shopping season can also mean more chances to make impulse purchases, fall for limited-time offers, or simply spend more than intended.
With the holiday shopping season getting longer, Andy Smith, executive director of financial planning at Edelman Financial Engines, explains how consumers can take advantage of an early start without letting holiday spending get out of hand.
Use the time to budget
Smith explained that an earlier holiday shopping season can work in consumers’ favor if they treat the extra time as a planning window, rather than a longer spending window.
“The longer shopping season offers more opportunities to compare prices and make thoughtful decisions,” he said. “Before making the first purchase of the season, consumers should determine what they can comfortably spend in total and then break up that amount across upcoming gifts, travel, entertainment, and other miscellaneous holiday expenses.
“Without a predetermined spending limit, people are creating more opportunities to blow up their budget – and knock their broader financial plan off-track.”
Setting a realistic holiday spending limit
When it comes to creating your budget, Smith shared his best advice for consumers – giving them plenty of time to start preparing for the added expense.
Start with your financial priorities, not your shopping lists. Look at essential expenses, debt payments and savings goals first, and then determine what you can allocate toward the holidays without disrupting those commitments.
Establish one total holiday spending number and account for more than just gifts. Travel, food, decorations, entertainment, and other seasonal expenses can all add up quickly and are easy to overlook when budgeting. Sometimes (most times!), it’s vital to remember that the money you spend on stuff is the same money you’re spending to be with friends and family – and, in the long run, one is probably a lot more important than the other.
Connect that budget to something worth caring about. This could be contributing toward retirement, building your emergency savings, or paying down debt. When consumers understand what they’re protecting, a spending limit can feel less like deprivation and more like a deliberate financial choice.
The benefits of spreading out purchases
Something important to keep in mind: Spreading purchases over several months doesn't automatically mean spending less. For some, the extra time can translate to extra spending.
“[Spreading out purchases] can make the expenses feel more manageable because they aren't hitting bank accounts or credit cards all at once, but that can also make it harder to recognize how much has been spent in total,” Smith said.
His advice: track all of your purchases.
“If consumers decide they’re spending $1,000 on holiday expenses, for example, that number shouldn't change simply because they started shopping in October instead of December. The real benefit comes when combining the extended timeframe with a fixed overall budget.”
Smith says the benefit of spreading out holiday purchases is having the extra time to compare prices, wait for the right opportunity, and avoid the pressure of last-minute purchases.
Avoiding pressure-filled purchases
The closer it gets to the holidays, it’s not uncommon to feel inundated with messages about sales, promotions, discounts, limited time items, holiday launches, and more. To avoid making impulse purchases or the pressure-filled feeling associated with many purchases, Smith advises consumers to slow down and use the extra time to their advantage.
“Consumers are surrounded by sales, promotions, social pressure, and messages encouraging them to act quickly,” he said. “Rather than trying to make the perfect decision on every purchase, establish a few simple financial boundaries ahead of time – you’re planning for the time (and it will come!) where you find yourself starting to rationalize ‘just one more purchase.’
“Ultimately, a good holiday budget isn't about spending as little as possible. It's about spending intentionally so you can enjoy the season without starting the new year having to undo the financial consequences. Know what you can spend, identify what matters most, and understand which longer-term goals you don't want holiday spending to compromise.”