The holidays are usually filled with joy, celebration and the giving of gifts.
Having a financial plan in place will enable you to be less stressed and get through the holidays with your finances intact.

Budgets and holiday celebrations

Our emotions are often more intense during the holiday season. Marketers are experts at using those feelings to make you buy things.
<ul>
<li>Make a rule for yourself: If an ad on the internet suggests a product to you, don't buy it.</li>
<li>Treat your emotions as if they are people. It can help you to detach from that emotion and be more mindful when you buy gifts.</li>
</ul>

Chat with your emotions

Ask yourself what you think a realistic amount is to spend on gifts for yourself and others. It should be a number that you can realistically afford without dipping into your savings or creating credit card debt.
Then do your best to stick to your budget without getting caught up in consumerism. One strategy could be to use your travel funds. If you've cancelled a trip, you could redistribute a portion of those dollars for gifts.

Create a holiday budget

For those who are able to see your family in person this holiday season, you can save money by doing a white elephant gift exchange instead of buying gifts.
Another fun activity is cooking a special meal or playing old fashioned charades.

Start a new tradition

Experiences often stand out over possessions in our memories. You can explore a nearby park or nature center with your friends and family, ice skate, ski, visit a zoo, or any number of other activities. 
Online, you can host a talent show or take a virtual craft course. The memory of doing a tutorial together and the funny mistakes you made, will stick for a lifetime.

Focus on experiential gifts

<img src="https://hbr.org/resources/images/article_assets/2020/12/ADec20_11_111035042.jpg" width="630" height="354"><div more-caption="more" close-caption="close" dir="ltr">
		Summary.&nbsp;&nbsp;&nbsp;
		Need to budget this holiday season? We have a few tips:

To stop advertisers from preying on your emotions, make a rule for yourself: If a product is suggested to you by an online ad, don’t buy it.
Plan now to spend what you can realistically afford without dipping into your savings, rent money, or...&nbsp;&nbsp;&nbsp;<button dir="ltr">more</button>
	</div><img src="https://hbr.org/resources/images/article_assets/2020/10/Ascend_Logo_2020_2x.png" alt="Ascend logo" width="105" height="25">Job and life advice for young professionals. See more from Ascend <a href="https://hbr.org/insight-center/ascend" dir="ltr">here</a>.The holidays are usually filled with joy and celebration, but I think we can all agree that this year feels drastically different. This is especially true for new grads and young professionals feeling the strain on their finances.While your friends and families may not all be dealing with the same pressures you face — finding a job, making rent, and generally, figuring out your life and career — everyone knows that it’s been a tough 12 months. Your loved ones likely won’t be disappointed if you can’t give them lavish gifts (and if they are, they might not be the best people to have in your circle).Regardless of how you decide to gift, having a financial plan in place will help you be (a lot) less stressed and get through the holidays with your finances intact for 2021.Think of me as your personal financial advisor this season. Here’s what I suggest you do:<h2>Chat with your emotions.</h2>Our <a href="https://www.health.harvard.edu/mind-and-mood/a-holiday-advisory-for-your-emotions" dir="ltr">emotions are often heightened</a> during the holiday season — nostalgia, excitement, sadness. This year, you’ll probably experience more than usual. Marketers are pros at using those feelings to make you buy things you didn’t even know you wanted.Take, for example, a little experiment run by <a href="https://www.vox.com/the-goods/2019/5/21/18634323/new-york-times-emotion-based-ad-targeting-sadness" dir="ltr">The New York Times (NYT)</a>. Last year, the company acknowledged that it uses machine learning to predict what people are feeling while reading their articles online. That data can be translated into a list of 30 frequently felt emotions, 18 of which are for sale to advertisers. The NYT is the not the only media outlet, by any means, that does this.The point? Companies can show us online ads based entirely on how we’re feeling in the moment. To stop them from preying on your emotions, make a rule for yourself: If a product is suggested to you by an ad on the internet, don’t buy it. It may be hard to overcome the temptation at first, but give it time. You’ll find that, after a few days of discipline, you have a much stronger sense of control over your financial choices, and that can feel empowering during this time when so much is uncertain.Pro tip: Imagine your emotions as people. Think Pixar’s <a href="https://www.youtube.com/watch?v=yRUAzGQ3nSY" dir="ltr">Inside Out</a>. According to <a href="https://www.businesswire.com/news/home/20201119005581/en/As-Black-Friday-Comes-Will-You-Shop-to-Cure-Holiday-Blues-Thinking-of-Your-Emotions-as-Guardian-Angels-May-Stop-You-from-a-Devilish-Impulse-Buy" dir="ltr">research by Dr. Rocky Chen</a> from Hong Kong Baptist University School of Business, this can help you be less swayed by your feelings when making purchases. If you typically find yourself binge shopping when you’re sad, for instance, try to detach that emotion by turning it into a character. Before you go scrolling for gifts online, have a quick chat with your sadness (mine is <a href="https://www.youtube.com/watch?v=PtwgCeKMhhY" dir="ltr">Phyllis</a> from The Office) to help you be more mindful before adding an item to your cart.<h2>Set a holiday budget — and stick to it.</h2>Attempting to control your emotions only goes so far. That’s why you also need to create a holiday spending plan before shopping for gifts at all. In 2019, the <a href="https://www.fool.com/the-ascent/research/christmas-spending-statistics/" dir="ltr">people who budgeted</a> for holiday gifts spent $878.21 on average; those who didn’t budget ended up spending $992.33.What’s a realistic amount to spend on gifts for yourself and others? The American Research Group’s annual <a href="http://americanresearchgroup.com/holiday/" dir="ltr">holiday spending survey</a> found that people plan to spend about $850 on average in 2020. That number might be too high if you’re already on a budget, so plan to spend whatever makes sense for you — that is, what you can realistically afford without dipping into your savings or rent money, or creating credit card debt.Remember that the holidays are not an emergency situation — no matter how bad you want to buy your parents an Apple Watch or a new TV. Holiday spending is one of the worst excuses for putting yourself in a risky financial situation. Despite that, 21.5% of people went into debt over the holidays last year.A smarter option may be to dip into your travel funds. If you’re like me and normally set aside money to go on vacation around this time, those dollars are probably sitting idle this year. If you’ve postponed a trip, you might want to hold onto that money. But if you’ve canceled it altogether, you could redistribute a portion of those dollars for gifts, or even for planning a fun virtual event with your loved ones. The same strategy can be used for concerts, sporting events, and anything else you may have budgeted for in 2020 that was canceled.Pro tip: Do your best to avoid getting caught up in consumerism by setting a holiday spending plan and using online shopping tools that can save you money, like <a href="https://www.joinhoney.com/" dir="ltr">Honey</a> or <a href="https://www.rakuten.com/" dir="ltr">Rakuten</a>. To stick to your budget, just imagine the difference between starting 2021 debt free versus being under a pile of debt.<h2>Start a new tradition.</h2>For those of you who are lucky enough to see your family in person this holiday season, you can save money by doing a white elephant gift exchange instead of buying a gift for every person. Aside from the money — and time — you’ll save with this method, it’s a fun experience that could even become a new tradition.For this kind of holiday gift exchange, everyone brings one gift to contribute to a common pile. As a group, make an effort to buy presents from local businesses or the communities that have been most impacted by the pandemic. In this way, you’ll be giving to multiple people at once.To start the exchange, each person draws a number to decide the order in which everyone picks gifts. The first person selects a gift and opens it, and the following participants can either pick a new gift from the pile or steal a gift from a previous player. If someone steals a gift you’ve opened, you have two options: Choose a new gift or steal from someone else. Each family has its own rules for how many times an item can be stolen — it depends on your tolerance for chaos.Pro tip: If you’re afraid a white elephant gift exchange will bring out the less charitable side of your family members, consider skipping gifts altogether and doing a different fun activity, like cooking a special meal or going old school and playing charades. Get a sense of how your friends and family members feel about gifts this year beforehand by letting them know that your financial situation may impact what you can give. Your loved ones might even be in a similar situation and feel relieved.<h2>If you’re going to splurge, focus on experiences.</h2>It’s easy to get caught up in negativity when we think about all the things we can’t do because of the pandemic. Spread a little more joy this year by focusing your holiday spending plan on experiential gifts.Think about the favorite gift you received as a child. Was it a toy that went out of style a few months after you got it, or was it a trip to an amusement park with your friends? Experiences often win out over possessions in our memories, and <a href="https://hbr.org/2020/09/does-more-money-really-makes-us-more-happy" dir="ltr">research suggests</a> that experiences bring people more happiness than material things.While it’s hard to get together in person, there are still fun things you can do virtually or while maintaining social distancing. You can explore a nearby park or nature center with your friends and family, ice skate, ski, visit a zoo, golf, or any number of other activities (provided everyone wears a mask). Online, you can host a talent show with your family, watch your favorite holiday movie using Netflix Party, Amazon Watch Party, and other apps like Scener.Pro tip: If you want to get extra fancy, take a virtual craft course. That hat you planned to buy for your sister might bring her joy for a few months, but the memory of the knitting tutorial you did together — and all the funny mistakes you made while at it — will stick with you both for a lifetime.Don’t get caught up in what you feel like you should spend during the holidays. Right now, when finances are tight for everyone, having a good plan will make your 2021 goals more attainable. Focus on how spending wisely today can help you afford the holidays of your dreams in the future.If nothing else, the greatest — and cheapest — gift you can give to yourself is introspection. Make a list of 12 things you did this year that you’re proud of. Maybe you didn’t make as much money as you planned, but I promise, if you made it here, you’ve done something worth celebrating.<UL><LI><author-avatar data-url="" data-author-name="Daniel Lee" data-js-target="author-avatar">
					DL
				</author-avatar><div dir="ltr">
					
						<a href="https://hbr.org/search?term=daniel%20lee&amp;search_type=search-all" dir="ltr">Daniel Lee</a> CFA, CFP, is a financial planner dedicated to helping busy people make intelligent financial decisions by providing clear, straightforward advice free from conflict of interest. He is currently the head of <a href="https://www.plancorp.com/" dir="ltr">Plancorp’s</a> San Francisco office, a full-service wealth management company serving families in 44 states. Daniel is an award-winning instructor at UC Berkeley Extension, and is a member of the CFA Society of San Francisco, and the National Association of Personal Financial Advisors.
					
		</div></LI></UL>

Four budgeting hacks from a financial advisor.

Money

Job and life advice for young professionals. See more from Ascend <a dir="ltr" href="https://hbr.org/insight-center/ascend">here </a>.

The holidays are usually filled with joy and celebration, but I think we can all agree that this year feels drastically different. This is especially true for new grads and young professionals feeling the strain on their finances.

While your friends and families may not all be dealing with the same pressures you face — finding a job, making rent, and generally, figuring out your life and career — everyone knows that it’s been a tough 12 months. Your loved ones likely won’t be disappointed if you can’t give them lavish gifts (and if they are, they might not be the best people to have in your circle).

Regardless of how you decide to gift, having a financial plan in place will help you be (a lot) less stressed and get through the holidays with your finances intact for 2021.

Think of me as your personal financial advisor this season. Here’s what I suggest you do:

Our <a dir="ltr" href="https://www.health.harvard.edu/mind-and-mood/a-holiday-advisory-for-your-emotions">emotions are often heightened </a>during the holiday season — nostalgia, excitement, sadness. This year, you’ll probably experience more than usual. Marketers are pros at using those feelings to make you buy things you didn’t even know you wanted.

Take, for example, a little experiment run by <a dir="ltr" href="https://www.vox.com/the-goods/2019/5/21/18634323/new-york-times-emotion-based-ad-targeting-sadness">The New York Times (NYT) </a>. Last year, the company acknowledged that it uses machine learning to predict what people are feeling while reading their articles online. That data can be translated into a list of 30 frequently felt emotions, 18 of which are for sale to advertisers. The NYT is the not the only media outlet, by any means, that does this.

The point? Companies can show us online ads based entirely on how we’re feeling in the moment. To stop them from preying on your emotions, make a rule for yourself: If a product is suggested to you by an ad on the internet, don’t buy it. It may be hard to overcome the temptation at first, but give it time. You’ll find that, after a few days of discipline, you have a much stronger sense of control over your financial choices, and that can feel empowering during this time when so much is uncertain.

Pro tip: Imagine your emotions as people. Think Pixar’s <a dir="ltr" href="https://www.youtube.com/watch?v=yRUAzGQ3nSY">Inside Out </a>. According to <a dir="ltr" href="https://www.businesswire.com/news/home/20201119005581/en/As-Black-Friday-Comes-Will-You-Shop-to-Cure-Holiday-Blues-Thinking-of-Your-Emotions-as-Guardian-Angels-May-Stop-You-from-a-Devilish-Impulse-Buy">research by Dr. Rocky Chen </a>from Hong Kong Baptist University School of Business, this can help you be less swayed by your feelings when making purchases. If you typically find yourself binge shopping when you’re sad, for instance, try to detach that emotion by turning it into a character. Before you go scrolling for gifts online, have a quick chat with your sadness (mine is <a dir="ltr" href="https://www.youtube.com/watch?v=PtwgCeKMhhY">Phyllis </a>from The Office ) to help you be more mindful before adding an item to your cart.

Set a holiday budget — and stick to it.

Attempting to control your emotions only goes so far. That’s why you also need to create a holiday spending plan before shopping for gifts at all. In 2019, the <a dir="ltr" href="https://www.fool.com/the-ascent/research/christmas-spending-statistics/">people who budgeted </a>for holiday gifts spent $878.21 on average; those who didn’t budget ended up spending $992.33.

What’s a realistic amount to spend on gifts for yourself and others? The American Research Group’s annual <a dir="ltr" href="http://americanresearchgroup.com/holiday/">holiday spending survey </a>found that people plan to spend about $850 on average in 2020. That number might be too high if you’re already on a budget, so plan to spend whatever makes sense for you — that is, what you can realistically afford without dipping into your savings or rent money, or creating credit card debt.

Remember that the holidays are not an emergency situation — no matter how bad you want to buy your parents an Apple Watch or a new TV. Holiday spending is one of the worst excuses for putting yourself in a risky financial situation. Despite that, 21.5% of people went into debt over the holidays last year.

A smarter option may be to dip into your travel funds. If you’re like me and normally set aside money to go on vacation around this time, those dollars are probably sitting idle this year. If you’ve postponed a trip, you might want to hold onto that money. But if you’ve canceled it altogether, you could redistribute a portion of those dollars for gifts, or even for planning a fun virtual event with your loved ones. The same strategy can be used for concerts, sporting events, and anything else you may have budgeted for in 2020 that was canceled.

Pro tip: Do your best to avoid getting caught up in consumerism by setting a holiday spending plan and using online shopping tools that can save you money, like <a dir="ltr" href="https://www.joinhoney.com/">Honey </a>or <a dir="ltr" href="https://www.rakuten.com/">Rakuten </a>. To stick to your budget, just imagine the difference between starting 2021 debt free versus being under a pile of debt.

For those of you who are lucky enough to see your family in person this holiday season, you can save money by doing a white elephant gift exchange instead of buying a gift for every person. Aside from the money — and time — you’ll save with this method, it’s a fun experience that could even become a new tradition.

For this kind of holiday gift exchange, everyone brings one gift to contribute to a common pile. As a group, make an effort to buy presents from local businesses or the communities that have been most impacted by the pandemic. In this way, you’ll be giving to multiple people at once.

To start the exchange, each person draws a number to decide the order in which everyone picks gifts. The first person selects a gift and opens it, and the following participants can either pick a new gift from the pile or steal a gift from a previous player. If someone steals a gift you’ve opened, you have two options: Choose a new gift or steal from someone else. Each family has its own rules for how many times an item can be stolen — it depends on your tolerance for chaos.

Pro tip: If you’re afraid a white elephant gift exchange will bring out the less charitable side of your family members, consider skipping gifts altogether and doing a different fun activity, like cooking a special meal or going old school and playing charades. Get a sense of how your friends and family members feel about gifts this year beforehand by letting them know that your financial situation may impact what you can give. Your loved ones might even be in a similar situation and feel relieved.

If you’re going to splurge, focus on experiences.

It’s easy to get caught up in negativity when we think about all the things we can’t do because of the pandemic. Spread a little more joy this year by focusing your holiday spending plan on experiential gifts.

Think about the favorite gift you received as a child. Was it a toy that went out of style a few months after you got it, or was it a trip to an amusement park with your friends? Experiences often win out over possessions in our memories, and <a dir="ltr" href="https://hbr.org/2020/09/does-more-money-really-makes-us-more-happy">research suggests </a>that experiences bring people more happiness than material things.

While it’s hard to get together in person, there are still fun things you can do virtually or while maintaining social distancing. You can explore a nearby park or nature center with your friends and family, ice skate, ski, visit a zoo, golf, or any number of other activities (provided everyone wears a mask). Online, you can host a talent show with your family, watch your favorite holiday movie using Netflix Party, Amazon Watch Party, and other apps like Scener.

Pro tip: If you want to get extra fancy, take a virtual craft course. That hat you planned to buy for your sister might bring her joy for a few months, but the memory of the knitting tutorial you did together — and all the funny mistakes you made while at it — will stick with you both for a lifetime.

Don’t get caught up in what you feel like you should spend during the holidays. Right now, when finances are tight for everyone, having a good plan will make your 2021 goals more attainable. Focus on how spending wisely today can help you afford the holidays of your dreams in the future.

If nothing else, the greatest — and cheapest — gift you can give to yourself is introspection. Make a list of 12 things you did this year that you’re proud of. Maybe you didn’t make as much money as you planned, but I promise, if you made it here, you’ve done something worth celebrating.

<ul><li><author-avatar data-author-name="Daniel Lee" data-js-target="author-avatar" data-url="">DL </author-avatar><div dir="ltr"><a dir="ltr" href="https://hbr.org/search?term=daniel%20lee&amp;search_type=search-all">Daniel Lee </a>CFA, CFP, is a financial planner dedicated to helping busy people make intelligent financial decisions by providing clear, straightforward advice free from conflict of interest. He is currently the head of <a dir="ltr" href="https://www.plancorp.com/">Plancorp’s </a>San Francisco office, a full-service wealth management company serving families in 44 states. Daniel is an award-winning instructor at UC Berkeley Extension, and is a member of the CFA Society of San Francisco, and the National Association of Personal Financial Advisors. </div> </li> </ul>

How to Get Through the Holidays Without Going Broke

Budgets and holiday celebrations

Chat with your emotions

Create a holiday budget

Start a new tradition

Focus on experiential gifts

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