Every year, people spend big on holiday gifts. Experts say if you want to avoid ending the year in debt, there are ways to strategically stay within your budget.
The first step is to lay out what your finances look like for the next few months — from upcoming paychecks to essential expenses.
"Your food, groceries, insurance, utilities, and make sure that you have enough coming in to cover all of your necessities," Kate Ashford said.
"And what you have left over is essentially what you're going to split between the things you're doing. Your wants category and the holidays."
From there, experts say to set up a plan. Figure out how much you are going to spend on gifts per person, and stick to it.
According to the National Retail Federation, the average consumer is expected to spend anywhere from just over $700 to more than $1,000 on holiday gifts.
Ashford is the lead wealth writer at NerdWallet. She says because there are a lot of payment options out there, make sure you do your homework to find what fits best.
For example, the buy now, pay later options may seem doable initially — until you crunch the numbers.
"Psychologically, it does feel like you're spending less when you make that first purchase, but you have to put into your budget those next few payments so that as they come due, you're not surprised, and you know that you are paying those off over time," Ashford said.
Also beware of credit card offers from stores.
"For a one-time savings, it can be tempting, but understand too that it's probably going to be a ding on your credit score because when you do apply for new credit, it does take your credit score down a few points at least temporarily," Ashford said.
And if you're still feeling overwhelmed financially, find other ways to cut down on your holiday costs — from Secret Santa gift exchanges to putting money toward a group activity instead of paying for individual presents.
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