December 10, 2021

As the holidays rapidly approach, you may have been working on achieving one of life’s biggest goals; purchasing a new home. During this time of year, continuing to save for a down payment and closing costs for a new home, can seem like a never-ending uphill battle. Instead of putting off your home-buying plans for yet another year, try making these few adjustments to your holiday spending and save more for a home or other important investments with these smart tips.

Set Spending Limit’s In Advance

It’s vital in order to meet your financial goals that you define and set your budgets spending limits before you begin making holiday purchases.  The average American plans to spend around a thousand dollars on holiday purchases in 2021.  Just because that is the “norm”, if those numbers are not in line with your financial goals, you do not need to feel pressure to spend more than you can afford.

Along with setting holiday spending limits, it is wise to not use credit cards but instead utilize cash or debit cards when making holiday purchases. The process of spending real money and watching it immediately leave your banking account instead of paying it off down the road over a prolonged period can seriously reduce your desire to spend more than you can afford. If you do decide to pay with catch this year, using physical envelopes to allocate spending can help you split up your money into categories before you make any major purchases, you’ll regret come January.

Disabling push notifications and location-tracking from retail apps on your phone, is another great way to help you avoid advertisements about sales that could tempt you to spend more than you had planned.

Set Expectations

If you are feeling pressure during the holidays for how you’ve historically given gifts to loved ones, get ahead of those seasonal expectations by sharing your financial plans with everyone on your list. Along with helping your loved ones recognize why this year might be different, you’ll help them understand what’s on your own list: cash for a down payment!  It is also smart, in all of your social circles, to consider imposing a maximum price on gifts this year. If setting spending limits makes you feel uncomfortable, know you’re likely not the only one who wants to save money.  Whether or not the spending limits hold long term, you can save even more by hosting a Secret Santa exchange, which limits the need to buy for multiple recipients, and delivers a bonus benefit of mystery and fun to the holiday season.

Enjoy Free Or Cheap Fun

Consider sharing experiences with your loved ones instead of just buying gifts for everyone. In many cases, these experiences are more memorable, and much more affordable.  To start, look for fun activities in your local community. Many chamber of commerce websites around the country feature an events calendar detailing free or cheap seasonal outings, such as tree lighting ceremonies, holiday markets and pop-up ice skating.

Another smart money-saving idea is to skip on the high cost of going out for dinner and instead invite your loved ones over for a holiday potluck. When everyone brings a dish, everyone shares the expense.  Likewise, there’s no shortage of holiday-themed movies to ring in the season, especially on streaming services. Instead of going out to a seasonal performance or a movie, invite everyone to your place to watch a classic holiday movie.

Develop Spending Habits Year Around

The benefits of developing healthy spending habits now can extend well beyond the holiday season.  By learning to follow a budget, you’ll be able to refine it after the holidays and continue to hold yourself accountable every week of the year, a skill that will come in handy when you do become a homeowner. By not increasing credit card debt during the holidays, you can more easily lower your credit to debt ratio, which will help increase your credit score, giving you an advantage when it comes time to find a mortgage and get the lowest possible rate.

The holidays happen every year, but what makes them special doesn’t involve Black Friday discounts or spending above your means. Reframe your budget to focus less on buying gifts and more on saving money. When your savings add up to enough to cover your down payment, you’ll be able to host next year’s holiday dinner in your brand-new home.