5 ways to save big and score a debt-free holiday season

The holidays can be a magical time, but they can also be hectic. Work parties. Gift exchanges. Shopping galore. Once the fun is over, you may be looking forward to recovering from that packed social schedule.

If you plan to put all those gifts on your credit card, you may have a sizable chunk of change charged to your credit cards, and that doesn’t account for interest paid on balances that stick around as the seasons change. And that could mean lots of holiday debt to start the new year.

Before you head into the holiday season, you may be able to avoid taking on that holiday debt. You might even be able to ramp up your savings for the next holiday season by starting now. Here are five tips to help you save money for the holiday season to achieve a debt-free December without being a Scrooge:

1. Create a holiday budget at the beginning of the year

You probably think of holiday spending as an end-of-the-year expense, but having an idea of how much you plan to spend makes it much easier to stay on track. Setting a budget early in the year is one of the best ways to save for the holidays and prepare your finances for the holiday season.

Whether you budget with old-school pen and paper or tech-savvy budgeting and spending apps, list out all of your holiday expenses: gifts, decorations, travel, entertainment, you name it. Don’t forget about charities you plan to contribute to at the end of the year. Assign an amount to each expense or person on your gift list, and calculate your total holiday budget.

2. Shop for gifts all year long

While it may be time to box up all of those holiday decorations at home, it’s also the perfect time to snag seasonal decor and gifts at clearance prices. Shop for what you can and buy only what you need, then stash it away until next holiday season.

For the rest of your gift list, try to shop intermittently throughout the year—when prices are reduced and especially when certain items go on sale. In January, stores often slash prices on bedding and linens, fitness equipment, TVs, and electronics. In February, you may find good deals on winter apparel and home goods. March often includes sales on grills, and in April it’s vacuums and jewelry all the way.

As you shop throughout the year, track your spending to stay on your holiday budget, and make tweaks as necessary. If you score a deal on one person’s gift earlier in the year and don’t spend as much as anticipated, you may be able to put more budget toward another gift or holiday expense. Find the perfect gift for Mom and splurge beyond your target amount? Track how much you went over, and focus on spending less elsewhere. You won’t miss cramming all of your shopping—and potentially paying more—into December.

3. Find ways to earn cash back

Believe it or not, some websites will actually pay you to shop, and the deals can vary based on the retailer. Make the deal even sweeter by using your cash back to save on holiday gifts for next year.

Consider the benefits of a rewards checking account: It can help turn the giving season into an earning season. With Discover® Cashback Debit you can earn 1% cash back on up to $3,000 in debit card purchases each month.¹ If you add your Cashback Debit card to a digital wallet, you can even earn on the go—and make purchases quickly and securely.¹

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Shopping for items that you don’t really need just to earn rewards could put a dent in your holiday budget, but earning cash back on items you planned—and need—to buy is a good cost-saving strategy that will help you have a debt-free holiday season.

4. Book holiday travel early—and be flexible

As some discount travel experts note, some of the busiest, and most expensive, travel days of the year tend to be right before and after Christmas. If your dates are flexible, you may be able to keep costs low and avoid crowds (nice bonus). Though travel prices are subject to change, you may also save by booking multiple airlines or flying into alternate airports. For the deepest discounts (bring on a debt-free holiday season), some travel websites suggest booking as early as possible and avoiding the costliest dates: Dec. 26 and Jan. 2. If you’re able to fly on Dec. 25, you may be able to land quite the deal and save money for the holidays.

To save on hotels, shop early and compare prices to put yourself in the best position to strike when the iron is hot. In addition to checking prices for hotels aligned with your favorite loyalty program, another debt-free holiday tip is to check with travel discounters.

5. Start a savings account for the holidays

While shopping year-round is the way to go, having cash set aside will give you more flexibility next holiday season. To build up cash reserves to cover your gift list and anything else the holidays throw your way, consider opening a targeted savings account just for the occasion.

You may wish to consider an online savings account which comes with minimal fees and easy online access. A Discover Online Savings Account makes it easy to save for holiday purchases, and the best accounts come with minimal fees and easy online access. By opening one early, you can save for the holidays with just a small amount of money each payday. That way, you can build a stash of cash to use for holiday gifts or any other year-end expenses you encounter.

By budgeting ahead, shopping smart, and saving as much as you can, you’ll be in better shape once another holiday season rolls around. The key, as always, is to start taking steps now to have a debt-free holiday season. Remember, the best holiday savings strategy isn’t one that happens overnight; it’s one that is carried out all year long.

Learn more about how to decompress from holiday financial stress.

¹ Earn 1% cash back on up to $3,000 in debit card purchases each month. See Deposit Account Agreement for details on transaction eligibility, limitations, and terms.

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This article is for informational purposes only and is not intended as a substitute for professional advice. For specific advice about your unique circumstances, you may wish to consult a qualified professional, at your expense.