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More than half of spenders break their budgets during the holidays. Find out how to spend less without compromising on gift quality. 

Image source: Getty Images

Your family. You appreciate them — hence, the hours you spend on the computer, searching for the perfect gift card, subscription service, or Etsy marvel. Yes, you’d rather not break the bank, but is there really such a thing as spending too much during the holiday season?

Research says yes. According to research from Rocket Money, about 13% of Americans reported overspending during the holidays in 2022. And according to an Affirm Consumer spending survey, a whopping 7 out of 10 Americans say they typically go over budget on the holidays.

You may be thinking, big whoop. Sometimes people spend too much; no need to be all Scrooge about it. Hold your reindeer. There are ways to deal with overspending without skimping on the good holiday vibes. Read on for three ways to stretch your winter budget without compromising.

1. Track spending

No need to create a fancy budget. Instead, track your spending with a money-tracking app. That way, you can keep track of how much you’ve spent on gifts. It’ll keep you from thinking you’ve only spent $500 when you’ve actually spent $1,500.

Knowledge is power. Even if you spend more than planned, you’ll know you’re over budget before you get slapped with a surprisingly large credit card bill. I’ve been hit with one or two after the holidays. Yee-ouch. Not fun. I like my spending to be transparent, thank you.

2. Spend with cash or debit

You can’t spend money that doesn’t exist. Cash isn’t just green (therefore, Christmas-friendly); it’s also a money-saver. You can’t borrow on cash. If you want to spend only $300 at Macy’s, bring $300 to Macy’s in cash and leave your credit cards at home. Easy. No fancy budget needed.

You can also spend with a debit card for a similar effect. It’s not the same as watching cold, hard cash slip through your fingers, but it caps spending to dollars in your checking account. I prefer cards to cash, so using a debit card is how I cap spending.

3. Partner with a loved one

Play a game like this: You and your partner can only spend $50 at most on each other. The specific number is up to you. Playing the game feels great; it takes the pressure to overspend off both of you. Instead of stressing about money, you can have a good time.

Chances are, you’re not the only one stressing about overspending. Keep the holidays fun by making “responsible spending” a friendly competition. I like to do this with my brother; both of us tend to stress about buying the “best gift ever,” and this helps us keep spending in check. We pay less and have a better relationship; it’s a win-win.

How much should you spend on holiday gifts?

This depends on what your loved ones want. Ask your family and friends what gift they’d like to receive this holiday season. Studies show that gift recipients prefer getting gifts they asked for rather than random yet thoughtful presents, even if they are expensive. Experiences tend to go over better than material goods, and many people get turned off by price tags.

So. What do your loved ones want?

People have different preferences. Some people care quite a bit about price; others prefer fun experiences over gift cards. Personally, I love a good gift card. Preferences vary. Playing the guessing game can stress you out. No need for that: Ask what the other person wants.

The point of the holiday season is to celebrate with loved ones. When I catch myself freaking out about holiday budgeting, I remind myself of this. It’s not about the money. It’s about having a good time. That means tracking spending and partnering with loved ones to create win-wins.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Etsy. The Motley Fool has a disclosure policy.

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