Let It Save: Your Ultimate Holiday Budget Plan

With Santa's sleigh grounded this year due to COVID-19, holiday spending is on everyone’s minds. In a year that has been unpredictable, especially when it comes to the economy and job security, what does it look like to budget well and spend wisely on gifts? Find actionable tips, spending insights and ideas for approaching the holidays in the guide that follows.

Holiday gifts traditionally account for 20% of annual retail sales, but economists predict the numbers could be askew for 2020. In an interview with the Wall Street Journal, retail industry analyst Sucharita Kodali predicted 2020 holiday spending would likely flatline when compared to 2019. Though she predicts online sales will soar by 20–25%, the lack of in-person shopping will be significant.

Recognizing these trends, retailers with online storefronts are working overtime to transition Black Friday to the digital space. Aside from Amazon's beloved Prime Day, Wal-Mart and Target have already introduced large-scale Black Friday events in hopes of appealing to online shoppers. While this transition may make holiday shopping less stressful than in years past, you may find yourself competing with far more shoppers to get the best deals.

Each year, Deloitte puts together a holiday retail survey designed to capture how households plan to spend their money and handle budgeting for holiday spending. The 2020 report highlights average spending for various common expenses and offers insight into where you could be saving.

Average Cost: $487

Gifts can include purchases for both family and friends, though the final dollar amount depends on how many gifts you plan to purchase. Some people also purchase gifts for coworkers and other work professionals. A T. Rowe Price survey found parents spent an average of $422 per child in 2018.

Average Cost: $260

Many spend their holidays traveling to see family while others enjoy time away from their home. Deloitte notes this number is down by 34% year-over-year due to the pandemic, but some individuals may still choose to fly or drive to see their families over the holidays.

Average Cost: $205

Whether hosting dinners, cookie decorating parties or holiday meals with the family, entertaining others at home can quickly add up with food and beverages, miscellaneous gifts and little extras to add sparkle to your festivities.

This year may be slightly different because of COVID-19. You can still have lovely holiday meals and cookie decorating fun with family members currently in your household and video chat with extended family members.

Average Cost: $435

Expenses falling into this category can include holiday decorations, greeting cards, flowers, movie tickets and other costs that you commonly incur while celebrating with others.

It's no secret that overspending during the holidays is tempting, especially if you enjoy seeing the glee of someone receiving a thoughtful present. Whether you tend to go overboard on gifts or holiday baked goods, there are ways to find a balance between keeping your budget and enjoying the holiday season.

By creating a budget early on, you can track your spending and ensure you don't break the bank. Below you can find some tips and ideas for keeping both your tree and your bank account in the green.

Deloitte reported the average household would spend $487 on gifts during the 2020 holiday season. This number may be higher or lower for you depending on the number of family members and friends whom you plan to give presents. A 2022 MoneyGeek holiday debt survey found that the average respondent spent $1,131 on holiday shopping.

Creating a budget before the holiday season starts can provide multiple benefits. In addition to ensuring you are debt-free, it can also help you set firm boundaries on spending and save money by avoiding frivolous purchases.

Here are ways to get started.

Americans plan to spend an average of $205 on entertaining at home during the 2020 holiday season. It's hard to know exactly how COVID-19 will affect this number. Some individuals may be planning more at-home gatherings to avoid restaurants, while others may slash this budget entirely to limit gatherings.

Creating an entertaining budget can help you be aware of expenses such as food, beverages, party favors, games and decorations. By identifying these early on, you ensure they don't sneak up on you during the holiday season.

Here are three tips to help you spend wisely.

Households plan to spend an average of $260 on travel during the 2020 holidays, a number that can vary substantially for families based on how they're handling COVID-19. Some individuals may decide to stay put this year while others may feel confident driving or flying.

Budgeting for travel can be tricky when you're at the mercy of changing airline ticket prices, but there are plenty of options for you to rein in spending and save on holiday travel.

Try these three tips for your travel plans.

Whether you stayed on budget or went over during the holidays, it's worthwhile to review your expenses, make adjustments to your budget plan and get a head start on your spending for next year.

Check out some of our tips below on taking a proactive step early in the new year.

If you're still looking for additional information or tips on holiday spending, check out some top-tier resources on the subject.

• Ten Tips for Intentional Holiday Spending: Utah State University provides this resource for students looking to keep their budgets this holiday season.
• How Much You Should Spend on Holiday Gifts, According to an Economist: PBS NewsHour published this article with insight from economist Jay L. Zagorsky.
• 2020 Holiday Retail Survey: Now in its 35th year, Deloitte pulls together this survey annually to provide insight into consumers' behaviors and motivations during the holidays.