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The holiday season is notoriously stressful, and financial pressure is a major factor. It isn’t just buying presents for family, friends, teachers, and coworkers, either. People feel compelled to spend extra money on food, drinks, festive outfits, decorations, travel, and more.

And for many people, this year is even more stressful than usual. In the Allianz Life Annual New Year’s Resolution Study, 40% of respondents say they are more stressed as we near the end of 2023 when compared to the same period in 2022.

“People are stressed about the holidays; people had to put a lot more of their holiday finances on credit this year,” says Grant Gallagher, personal finance expert and Head of Wellbeing at Affinity Federal Credit Union. “They’re just trying to figure out how they can still make the holiday special while not spending a ton of money.”

So, how can you get some of these financial bricks off of your shoulders?

Sure, one of the best ways to reduce financial stress during the holidays is to lower your costs. Recent MassMutual survey data shows that Americans plan to do just that—around 77% of those surveyed say they plan to keep their holiday spending steady compared to (or lower than) last year.

But simply spending less during the holidays is easier said than done. So is keeping your anxiety at bay.

That’s why today, we’ve enlisted the help of Affinity Federal’s Gallagher to help readers get themselves into a better financial and mental place. Please read on as we go over several actionable tips for how to reduce financial stress during the holidays.

Tip #1: Start With a Conversation

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When it comes to holiday expenses, Gallagher suggests having that conversation up front and setting reasonable expectations. Even little expenses add up, so you should cut what doesn’t matter much and focus your spending on gifts and traditions that have the most meaning.

Consider what’s most important to your family. Do you always make an extravagant dinner because it’s tradition, when everyone would enjoy a simple meal just as much? Does only half of the family enjoy the expensive matching outfits you buy every year?

Keep your favorite activities and eliminate the non-essentials. That way, it’ll be visions of sugar plums—and not credit card bills—dancing in your head.

Related: 14 Best Apps That Give You Money for Signing Up [Free Money]

Tip #2: Don’t Neglect Your Emergency Fund

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A lot of families are just one big emergency expense away from having their finances blown up—depending on the study, anywhere between 20% to 60% of Americans don’t have enough stashed away for a rainy day.

That’s a problem, because any emergency is stressful—but the stress from an emergency around the holidays (when your funds are probably even lower) can fly off the charts.

“In a report from LendingClub and PYMNTS, they noted that the average U.S. consumer emergency expense is up to $1,700,” Gallagher says. “So if you don’t have $1,700 put away, you’re probably in a bad situation.”

Let’s say your water heater breaks in the middle of the winter. If you have a healthy emergency fund, you should be able to get that fixed right away, then slowly rebuild the fund to its previous balance. But if you don’t have enough emergency savings, you might find yourself cutting back on holiday costs or putting everything on high-interest-rate credit cards.

That’s why it’s essential to have a fully funded emergency fund. But we understand that it’s difficult to start building that fund in the middle of the holiday season, so put this on your to-do list in the coming year ahead of next year’s holiday season.

Related: 4 Best Ways to Save Money for Kids [Children’s Savings Plans]

Tip #3: Conduct a Subscription Audit

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A lot of people turn over a new financial leaf at the start of the new year by canceling unnecessary memberships and subscriptions. So, why not push that up a few weeks and do it during the holiday season, and get the psychological lift you receive from freeing up extra budget a little earlier?

Gallagher recommends everyone do a subscription audit, where you figure out what you’re actually using and what you aren’t. Cancel any services you aren’t using.

Sometimes people discover that they don’t miss these services. Sometimes people do miss them—but it’s easy to sign back up, and you can sometimes do so at a promotional rate, and you’ve saved money from the month or two you’ve skipped subscription payments.

Phone, internet, and cable plans “are all kind of notorious for having bill creep,” Gallagher says. “They’ll tack on some small mystery fees throughout the year and your price will slowly go up.” This bill creep has been particularly bad of late—Netflix, Disney+, Hulu, Apple TV+, Max, and Peacock are among the major streamers that raised prices in 2023.

“You can usually take action by reaching out to them and asking if they can remove whatever fee is giving you some sort of criminal rate,” Gallagher says. “A lot of times if you tell your internet provider that you’re going to their competitor, they’ll discount your rate, and this can save you a fair amount of money throughout the year.”

Too shy to call about canceling a subscription? Services like Rocket Money will actually make negotiations for you. They take a cut of the savings, so you won’t save as much money as you would have on your own, but you’ll still save some money—and some time and frustration, too.

Related: 50+ Best Money-Making Apps That Pay You Real Money

Tip #4: Add Holiday Expenses to Your Budget

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As a general rule, people should review and update their budgets at least every six months. If you’ve had a major life change, such as getting married or new employment, you should also adjust your budget then. And the beginning of the year is a popular time to make budget changes.

“Anything you’re going to have to spend money on throughout the year should be factored into your budget,” Gallagher says.

That should include holiday expenses, too.

If your family throws an extravagant annual holiday party, if you go see The Nutcracker in a theater every year, or even if you have a relatively fixed spending amount for presents, plan for that expense ahead of time rather than let it keep taking you by surprise every holiday season.

While we’re at it, make sure you’re factoring other once-a-year costs into your budget, too. That can include birthdays and other holidays around the calendar, but also memberships and annual insurance premiums. For instance, Costco memberships are due just once a year, so it’s easy to forget about in terms of a monthly budget.

According to MassMutual data, half of Americans plan to cover holiday costs with money they already have set aside. The more people that adopt this strategy, the better.

Related: 7 Best Wealth + Net Worth Tracker Apps [View All Your Assets]

Tip #5: Keep Holiday Savings Separate

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Many people just pay for gifts from credit cards or their checking account. But you might consider keeping your holiday savings separate.

Some people use the envelope method, putting cash in a physical envelope and reserving it for their holiday spending. (Gallagher thinks that strategy is a little risky, though, because cash isn’t insured.)

Your best bet is to use a fluid account, such as a high-yield savings account or money market account—even if it’s just used to pay off credit card expenditures as you go. And choose an account with a high interest rate so you can earn a little bit until it’s time to spend that cash.

Want to reduce any temptation to spend any of your holiday savings? You could put your money in a short-term certificate of deposit (CD), which should pay you a competitive rate—and charge you a penalty if you try to rob the cookie jar before the maturity date.

Related: 7 Best Round-Up Apps for Saving + Investing Money Instantly

Tip #6: Rethink Traditional Gift Giving

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Another suggestion from Gallagher is to consider alternative gift giving options.

For example, you could do a “secret Santa” exchange where each person just buys one present. You could have a potluck holiday party to celebrate. Cookie exchanges are also becoming more popular. We even have a number of financial-related Christmas gift ideas that could cost you nothing—and even helped a loved one earn and/or save more money down the road.

Just make sure you do the math to ensure your gift-giving alternatives are actually saving money. If you volunteer to host an event and cover all of the expenses yourself, that could easily end up matching the cost of giving out presents.

Related: 10 Financial Gifts for Babies, Kids & Grandkids [No More Toys]

Tip #7: Take Advantage of Discounts

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It probably goes without saying, given the popularity of “deal holidays” like Black Friday and Cyber Monday … but as you make your holiday purchases, take advantage of whatever deals you can.

That doesn’t just mean sales, either—students, seniors, teachers, veterans, and other groups can sometimes secure significant discounts just for being who they are!

For instance, in early December, Amazon Prime Student members had a limited opportunity to book a one round trip or one-way domestic flight ticket through StudentUniverse for only $25. Saving on travel back home likely gave those lucky students a lot more wiggle room in their budget.

Especially keep an eye out for these discounts on major purchases, such as laptops and other technology. The savings can be significant.


Hannah Kowalczyk-Harper has been a professional writer since 2016 and has worked with WealthUp (formerly Young & the Invested) since 2019.

Prior to becoming a full-time writer, she was still immersed in words through previous roles as a library specialist and teacher. Her background in education helps her take complex topics and turn them into easy-to-understand text.

Hannah holds a degree in Elementary Education from the University of Wisconsin–Madison. When she isn’t writing, Hannah is usually found playing with her niece and nephew, traveling, or brewing more coffee.