Set a budget that you can afford and stick to it. Don’t go into debt or take on more debt. Some experts suggest that you should spend no more than 1.5 per cent of your total income on holiday spending. For a family earning $100,000, that’s $1,500, which is close to the typical holiday budget. Sticking to a budget can be hard if you feel you can’t afford to be as generous as you would like. But don't give in to the pressure to spend more. Remember: one of the greatest gifts you can give your family is to save for the future and avoid money problems.

Use this worksheet to plan and control your spending. Don't forget to include all the things you will spend money on over the holidays, including parties, decorations, gift-wrapping and food.

Base your gift choices on what you can afford from Step 1. Remember: gifts are to acknowledge your love and appreciation for the people in your life. There’s no dollar value on the words “thank you” and “I love you.” It’s also important to teach children early that thoughtful gifts don’t have to be expensive.

You likely aren’t the only person in your circle who wants to cut back on holiday spending. So before the holidays arrive, talk to everyone you exchange gifts with and change the rules. For instance, you can agree to:

• spend less or not exchange gifts at all with some people
• exchange only things you can eat or drink
• give handmade gifts only
• give money to a charity.

Make saving for holiday and family celebrations something you do each month. That way you will be spending cash you already have on hand. You’ll then be less likely to use credit to pay for your purchases. Or, if you choose to use a credit card for convenience, you’ll have the cash to pay it off right away.

To learn more about the dangers of overspending, read How much does that expensive gift really cost? Luc’s story.

Don’t go shopping without a list. You will be far less likely to buy on impulse. That means you will also be more likely to stick to your budget. Before you shop:

• List the people you plan to buy gifts for.
• Think about their interests and the kind of gifts they would like.
• Estimate the cost of each item on your list. You may be able to do this online.
• Check that the cost fits your budget.

Another option is to give a gift card. This is becoming an increasingly popular choice:.Gift cards in Canada are a multi-billion dollar industry. . Just be sure you check on fees and any expiry dates.

Last-minute shopping can be expensive. Stores may be out of the items on your list. And in the crush of shoppers, it’s easy to get tired and frustrated. That’s when you’ll likely make costly impulse buys, just to finish the task.

Likewise, if you shop online, you may get a great price. But you’ll lose those savings on costly shipping fees if you wait until the last minute to order. So don’t do all your shopping in late December using your credit cards. By pacing yourself throughout the fall, you'll be less likely to overspend.

One of the best ways to stick to a budget is to pay cash for everything. Even better, before you start shopping, go to the bank. Take out the total dollars you can afford to spend over the holidays. Put the money in an envelope and pay all your bills from that single source.

If you must use a card, make it your debit card. Or, use the same credit card for all your purchases. That way you’ll see everything you’ve spent on one statement.

To learn more about the dangers of credit card debt, read How much does that expensive gift really cost? Luc’s story.

The longer it takes you to pay off your card, the most interest you’ll pay. So even if you stick to your holiday budget when you shop, unless you pay off your card in full you will still overspend.

Here’s another reason to avoid high credit card balances: it can lower your credit score. Spending more than 30 percent of your limit can cause your credit score to drop. Spending more than 30 percent of your limit can cause your credit score to drop. Learn more now about credit scores. If you do end up with credit card debt from the holidays, consider getting a single lower interest loan to pay it off. This will lower your interest costs over time. Use this calculator to explore ways to pay off your credit card debt.

Keep careful records of what you've spent and what you’ve bought. If you start shopping early, it can be easy to lose track over several weeks or months. Try putting all your shopping receipts in a single envelope. As you shop, add the amount of each new purchase onto your total. Or, use this holiday budget worksheet.

Watch for sales throughout the holiday shopping season. Sign up for e-mail or even text-message promotions from the retailers you are most likely to buy from this season. Also sign up for or check the balances you have on rewards programs offered by debit and credit cards. You may be able to get a free gift or a discount.

There are two ways you can try to cut your travel costs:

• buy your tickets early, at least by October, or
• wait until the last minute. Some travel websites have last-minute sections that offer huge discounts on travel packages. You must be flexible on your dates, however.

If you always travel to see family, there’s also the option of staying home this year. Or, have your family come to see you.