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The Hugging Bear Inn and Shoppe, Chester, Vermont
Susan Pease—Alamy

When I was a kid, the holidays were pure joy. I'd wake up, and red-, green-, and gold-wrapped presents would ripple from the base of our Christmas tree.

As a parent, though, this time a year is a bit more complicated. I want my wife and son to experience a memorable holiday season, but I don't want us to venture into financial ruin. Gifts, after all, cost money; so do travel plans, holiday decorations, and other special events.

I'm not the only one plagued by the holiday budget challenge. Research shows that consumers are particularly maladroit when it comes to Christmas-season finances. Almost two-thirds of parents with children between the ages of 8 and 14 acknowledge that they spent more on their kids than they should have, according to T. Rowe Price's annual Parents, Kids & Money Survey. Even worse, 7% of parents say they tapped retirement savings for holiday gifts for their kids, the survey found, and 9% used their emergency funds.

But don't place the blame only on parents: Almost a third of those in a relationship have gone into credit card debt to buy a gift for their significant other, says NerdWallet and TransUnion. We are simply undisciplined once the holiday sale signs go up. "It's just easier to buy the gift and say, 'I can pay this off in three or four months,'" says NerdWallet credit card expert Sean McQuay.

Of course that kind of perspective comes with long-term consequences that will cost you real money. Here are a couple of things you can do if you want to make it through the 2015 holiday season with your credit score and finances intact.

Set Priorities

One reason folks find themselves spending more than anticipated, and often taking on debt to do so, is because they don't have a clear idea about how much money is coming in and how much is going out. Rather than sitting down and figuring how much cash is available for the holidays, they simply buy gifts that seem to be within an appropriate price range.

Dreary as it may sound, setting a budget is the best antidote. "The earlier you start planning, the better," says Pensacola, Fla.-based financial planner Matt Becker, author of The New Family Financial Road Map. "That gives you a chance to be proactive instead of trying to make last-minute impulse decisions."

Becker recommends allocating a set amount and deciding how much of that money you want to spend on holiday gifts, travel, and parties. Once you've set your limits, you then can go to the mall, or Amazon, with a game plan.


Whenever you're trying to save, it helps not to confuse money spent with actual love shared. The NerdWallet and TransUnion poll found that people in relationships were willing to endure, on average, $200 of credit card debt to get find the right present. Men were 11 percentage points more likely than women (47%, vs. 36%) to buy a gift for their partner with debt. And a startling 61% of millennials said they were okay with using debt to "buy the perfect gift."

Bad idea.

Here's a better one: Talk through your gift-giving game plan with your partner. "Everybody wants to show their love, affection, caring through gift giving -- but there are some things they forget," says Maggie Baker, a psychologist and financial therapist and author of Crazy About Money. "One is looking at their budget; two is asking the person what they really want; and three is to consider whether the gift is the only thing that they can give."

Presents that demonstrate a commitment of time and thought, like poems or photo albums, are likely to resonate more strongly with their recipients, she says.

Another option for couples, NerdWallet and TransUnion suggest, is to collaborate to buy an experience: "Book a weekend at your favorite B&B, or buy an annual pass to an arboretum where you both love to take walks," recommends McQuay. The memory of a romantic escape to wine country will likely outlast the utility of a trendy piece of technology.

If you're not keen to abandon separate gifts, you and your partner can also set a hard cap on how much you'll spend, agreeing to buy something that falls under a reasonable limit. This way you'll maintain mystery and the element of surprise without taking on debt.

This is our second holiday season with a child and, to be honest, we're still trying to find the right balance between a memorable Christmas and reasonable spending. You are probably in the same boat. The trick is to become comfortable openly and honestly discussing the amount of spending that's right for us.