How to Manage Holiday Spending: Tips for Those Close to or in Retirement

The holiday season is a time of celebration, connection and, sometimes, added financial pressure.

In fact, one-fifth (20%) of U.S. adults anticipate going into debt to pay for holiday celebrations and obligations, according to a report by Morning Consult, a survey research firm.

For those nearing or in retirement, keeping holiday spending in check is essential to avoid dipping into savings earmarked for long-term goals. At Advance Capital Management, our approach to financial and retirement planning is designed to help you implement smart strategies, so you can enjoy each season without compromising your financial well-being.

Here are some practical tips to manage holiday expenses thoughtfully, balancing generosity with financial prudence.

1. Set a Realistic Holiday Budget

Creating a holiday budget might sound tedious, but it can be incredibly freeing. Start by outlining what you realistically want to spend on gifts, events and any travel.

Planning ahead is especially important as rising costs continue to impact the prices of everyday goods. By setting clear spending boundaries, you’re better positioned to enjoy the festivities without worrying about potential overspending.

Tip: Divide your holiday budget into categories (gifts, travel, entertainment) and set spending limits for each. Tracking as you go can help you stay within those limits.

2. Embrace Intentional Gifting

While it’s natural to want to be generous with loved ones, it’s easy for costs to add up. Rather than splurging on expensive items, consider giving meaningful gifts that fit your budget.

Handmade items, charitable donations or experiences like a special meal together often create lasting memories without carrying a hefty price tag.

3. Avoid Holiday Debt with Cash-Only Purchases

Using cash or debit to pay for holiday expenses can help limit the temptation to overspend. Many people rely on credit cards for holiday purchases, and research shows that about 28% of last year’s shoppers are still paying off their holiday debt.

High credit card interest rates mean that even moderate spending can snowball into a larger financial burden if not paid off quickly.

Tip: If you do use a credit card, try to pay it off in full each month. For those who want to earn rewards, look for cards with cash-back benefits or travel rewards to get more value from your spending – but only if you can avoid carrying a balance.

4. Be Smart About Holiday Travel

Traveling during the holidays can quickly become expensive, so a little flexibility and advanced planning can go a long way. Consider traveling during non-peak days or opting for alternatives like driving or taking a train instead of flying, if possible. If you can avoid peak travel dates, you may find some relief in pricing, allowing you to reserve more of your funds for other activities.

Tip: Sign up for fare alerts through travel websites to catch the best deals and consider booking lodging well in advance or looking into affordable options like rentals.

5. Think Ahead to Tax Time

If charitable giving is part of your holiday tradition, the end of the year is a great time to make donations. Not only does this fit the season’s spirit, but charitable donations may also provide tax benefits.

Consider donating appreciated stocks or assets rather than cash to maximize tax savings while helping causes that matter to you.

Tip: Many retirement accounts allow for qualified charitable distributions (QCDs) for those over 70½, letting you contribute directly to a charity from your IRA, which can reduce your taxable income.

6. Don’t Let the ‘Sales’ Get the Best of You

Holiday sales are designed to create urgency, which can make it tempting to spend on things you hadn’t planned for. Before making any impulsive purchases, take a moment to ask if the item is truly needed or if it aligns with your priorities.

A “cooling-off” period of even 24 hours can make all the difference.

7. Work with a Financial Adviser to Build a Comprehensive Plan

The holidays can bring financial challenges, but having a clear, comprehensive plan can provide peace of mind and help you feel more in control of your financial life.

Working with a financial adviser can give you valuable insights into your spending, savings and charitable giving strategies, making it easier to navigate seasonal expenses without compromising your long-term goals.

Tip: An adviser can tailor advice to your unique situation, helping you make smart choices that keep your spending aligned with your overall financial health. If you need a financial plan, you can get started right now by scheduling a free consultation here.

8. Focus on What Matters Most

Ultimately, the holidays are about creating memories with those you love. It’s easy to get caught up in the shopping, but often, the most valuable parts of the holiday season are the shared moments and connections.

By managing spending with intention, you’re giving yourself the gift of peace of mind, knowing that you can enjoy the season without compromising your financial stability.

In the end, sticking to a thoughtful budget, keeping an eye on credit usage and prioritizing meaningful experiences can help make the season as rewarding as it is festive.