Ah, the holidays. So many of us look forward to the same traditions, taking time to celebrate, and seeing our loved ones. But money can be a huge stressor around the season, especially in a year when wages aren’t keeping up with rampant inflation, and there’s talk of a potential recession — not to mention layoffs at many major US companies. In fact, 43% of consumers say they don’t make enough to cover holiday expenses this year.

At the same time, 62% of consumers say spending money on the holidays is important to them, and they plan to make it work … somehow. So how can you plan your celebrations without breaking the bank — or totally missing out? Truth be told, other people in your gift-giving circles are probably asking themselves the very same question.

Here are a few things to think about — and talk about — as you head into the holiday season.

Have the gift-giving convos early

The way people spend money has changed a lot over the past few years. For you and the people you care about, gift giving might be more stressful than it was in the past. But wondering where everyone stands is also stressful, so talk to your friend and family gift-giving circles early.

The good news is that this isn’t personal. Inflation affects everyone, so it’s OK to use that to start a conversation with each of your gift-giving circles. As you have these conversations, you’re looking to check in on your shared values, and what’s really important to each circle. (Knowing your values and connecting your decisions to them makes each choice feel more meaningful, while also making it easier to talk about.)

If you decide not to give gifts

If you don’t want to give gifts this year, you can still honor those values. What’s important about your usual traditions? How can you replace the normal with something that feels important in the same way?

For example, say your family can agree that you usually give gifts to show each other that you love and appreciate them. You could consider opting instead for something like The Thank-You Project, where you write a letter of gratitude to each person. Actually writing down how much someone means to you can be powerful for you both.

Or say your friend group values togetherness — that whatever time you manage to carve out for the group, especially in the middle of a busy season, means a lot. You could plan just a small-scale, in-person gift exchange, or coordinate something like holiday decorating via Zoom so that you’re all doing the same thing at the same time.

Or maybe to your siblings, tradition is important — when you suggest changing it up, they tell you, “We’ve always done it this way.” You could start exploring the traditions you have now. Which can you honor differently? Which can you postpone and then find ways to look forward to and honor them throughout the year?

If you go ahead with gift giving

With some groups, you may agree that gift giving is important and doable. You can still find ways to set ground rules and make them meaningful. A few common ones:

• Set a maximum dollar amount for each recipient. “We’ll spend $50 per person, and you can put it to one gift or several.”

• Only give to the kids under an agreed-upon age — or generation, if there are a few “kids” just barely above that age. (I mean, the past few years have been hard enough on Gen Z as it is.)

• Set up a “Secret Santa” or “White Elephant”-type holiday gift exchange. Santa’s optional; the point is to have everyone draw one name and buy one present. That can really help when budgets are tight. (It’s also a fun way to get kids involved with giving without overwhelming them, btw.) You can use a site like Elfster to help you randomly draw names and share wishlists.

• Decide on a max number of gifts, instead of a max budget. This option could let people in the group who have a bigger budget spend how they like, without it feeling too obviously lopsided.

• You could also agree to let the people who have a budget lavish on the people who don’t. Not everything is always equal in life, and that’s also OK. The important part is talking it through and making sure everyone feels right.

Also, if you don’t do it already, consider having everyone in your group explain the meaning and thinking behind each gift. That will remind the group of your shared values — and also take up some of the time that’s usually spent opening more gifts. (One of the hard parts of cutting back on gifts is that feeling of “It’s over already?!?!”)

If you do shop, do that early, too

As in, “what are you doing this weekend?” early. As in, “as soon as you’ve got those ground rules in place” early. There are a few reasons to get through your gift list as quickly as possible this year.

For one thing, you might have trouble finding everything later on. While we’re nowhere near the supply chain issues that plagued last holiday season, there are still some lingering effects. Especially if you (like us!) love to support small businesses: Early orders help them get ahead and ensure they can get you what you want on time.

And if you always wait for Black Friday, Small Business Saturday, and Cyber Monday for the best deals, no need: Like last year, you can expect those deals to be more spread out (and, obviously, online). The season for deals has already started, in fact.

But before you shop, decide on a holiday spending plan

Figure out what you can afford

One of our favorite budgeting methods at Ellevest is the “one number” approach. The holidays are a good time to try it out, because it helps you know how much you have available to spend on things like gifts each month. Here’s how it works.

1. Add up all your monthly fixed costs — the things you pay every month, like rent, Hulu, cell phone, minimum debt payments.

2. Then add up everything you’re putting toward Future You, like debt payments beyond the minimums and investing.

3. Add up your non-monthly expenses, like annual fees, then divide those by 12.

4. Subtract those three things from your monthly take-home pay.

5. What’s left over is your “one number” that you can spend up to each month.

6. Pro tip: Create a separate account to hold just that one number each month so you don’t go over.

You can keep going with this one number budget into next year, too — and starting in January, you can estimate what you’ll spend on presents as part of those “non-monthly expenses” so you can save up for them.

Extend your budget

We typically don’t recommend buying things with a credit card if you don’t have the money to pay it off within the month. And that definitely hasn’t changed lately, as financial unpredictability has become the norm for many. Nobody wants to go into the new year with credit card debt.

Instead, look at ways to extend your budget. Maybe you can use credit card points or cash back to buy things on your list — especially if you’re not using those points for travel these days. You can also use sites like Raise or Rakuten to get cash back or discounts on things you were going to buy anyway.

Plan for it

It can help to make a list (and check it twice!) of all the people you plan to give gifts to, and then decide how much you want to spend on each person ahead of time. That way, you can make sure it doesn’t add up to more than the total amount you’ve decided to spend on holiday gifts. (Ellevest members can download a free spreadsheet to help with this!)

Let me leave you with one final tip: You can get a jump-start now for 2023 by setting up autopay to a separate account. Starting in January, consider saving a little bit each month for the holidays, so it doesn’t sneak up on you. Some credit unions and banks offer holiday savings clubs that let you deposit money all year and possibly earn higher interest rates in exchange for not being able to access that money until holiday time rolls around again.

Disclosures