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Indiana Securities Division

Securities Division > Indiana MoneyWise > News You Can Use > Budgeting for the Holidays Protect Your Pockets Series

Budgeting for the Holidays

(originally published November 2010)

Holiday season is in full swing and across the state Hoosiers are putting up decorations, planning parties and searching for the perfect gift for everyone on their list. For many, that all adds up to the most wonderful time of the year. But for those struggling financially, worrying about paying for everything can be overwhelming. Keep financial stress from interfering with your holiday celebrations with careful budgeting and a little bit of creativity.

Having a plan for your money – and more importantly, sticking to it – is crucial for keeping financial stress at bay. Before you start your holiday shopping, sit down and examine your budget to find out what you can realistically afford to spend this year. Calculate how much flexible income you have left after allocating for your monthly expenses and contributing to your saving and investing accounts.

After determining your holiday spending budget, work hard to stay true to that figure. It may help to withdraw cash and use that to make purchases versus a credit or debit card. When you run out of cash, you know you’ve reached your spending limit whereas the temptation to spend more may be easier with a credit or debit card. Credit cards are especially tempting since you don’t have to pay right away, but keep in mind that they only provide temporary relief from financial woes.

Be open and up front with your friends and family members if your holiday spending budget is less than in years past. Agree ahead of time to only buy a certain number of gifts per family member or not to exceed a certain dollar amount on gifts for friends. You can also get creative and challenge your family to come up with homemade or free gifts. Or consider not buying any gifts and pledge as a family to give back to others by volunteering with a local organization during the holidays.

When trying to find gifts for friends or family members, some people save time and effort by simply giving money. Cash, checks and gift cards are the most common, but there are other financial gifts you can give that may have a greater impact over the long run. For example, instead of simply giving money to a younger relative, take them to the bank to open a savings account and use your gift as their first deposit. Explain to them how the account works and encourage them to continue saving year-round.

You can also start a College Choice 529 Plan to help a niece, nephew or grandchild save for college. You can open an account for as little as $25 and can earn an income tax credit of 20 percent of contributions to your 529 plan, up to $1,000 per year. There are a range of investment options for your 529 plan. For more information, visit

Finally, you can give savings bonds as gifts. Savings bonds are low risk investments offered through the U.S. Treasury Department. The bond represents a loan to the government that will be repaid in full with interest at a specified future date. You can learn more about savings bonds and how to give them as gifts at or at your local financial institution.

For additional money management tips and tools, visit

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