By Catherine Martinez

A few years ago, I found myself in a Best Buy on Christmas Eve, looking desperately for a gift for my husband. I had bought him a few things—socks, a new pack of undershirts, and the traditional Pez dispenser, but nothing great. After wandering around for about an hour, I finally found an electric razor I thought he would like with all of the bells and whistles. I didn’t see a price, but all of the other razors on the shelf were in my price range, so I assumed this one would be, too.

My jaw dropped to the ground when the cashier said, “That will be $326, ma’am.”

“What?” I screamed inside. “That’s three times my budget!”

Embarrassed, I swiped my credit card and gave a half-smile.

Fortunately, my husband didn’t want that electric razor, so we returned it. But I learned my lesson: Because I had failed to plan for the holidays, I had nothing but a huge credit card bill and a lousy gift.

In contrast, in years when I’ve carefully planned, I’ve spent less money and given better gifts. Learn from my mistakes and plan for holiday purchases now. These tips will help you get started.

1. Know yourself

Analyze last year’s spending patterns and pinpoint your strengths and weaknesses. Is Black Friday helpful to your budget? Or does it just tempt you to spend more? Be honest; it’s the only way to make a realistic plan.

2. Start saving in January

If you save extra money throughout the year, the holidays won’t shock your bank account. Start with a budget goal and figure out how much money you will have to set aside each pay period to save that amount. Open a free checking account with no minimum balance for easier tracking.

3. Set a budget and plan each gift

Figure out what you can afford to spend and stick to it. Then, make a list of people you plan to buy gifts for, assign each person a corresponding budget, and plan the specific gift or gifts before walking into a store or making an online purchase. Use a price-tracking tool like the Honey app to get the best deal, research Black Friday deals ahead of time, and record your spending with an Excel spreadsheet with built-in formulas.

4. Plan out every other possible expense

There’s more to purchase besides gifts at the holidays: décor, lights, travel expenses like gas or airfare, or ugly Christmas sweaters. These items need to be included in your budget.

5. Don’t forget about food expenses

A friend of mine doubles his food budget in December, a wise strategy.  And since this is a pandemic year, try buying your groceries online and then picking them up at the store. You won’t forget to buy the secret ingredient to grandma’s apple pie and you can keep a running tally of the cost as you fill your cart.

6. Consider using a cash-back credit card

Use a cash-back credit card throughout the year and use the rewards to pay for holiday expenses. Note: This is why knowing yourself is essential—you must manage your credit responsibly in order to use the credit card rewards to your advantage.

7. Cash is still king

There’s nothing wrong with the cash envelope system. Write the category’s name on the outside of the envelope and insert the budgeted amount of cash inside. When the money runs out, no more spending.

8. Get creative and implement low-cost traditions

Think about how you can make Christmas more fun and less expensive through your talents and creativity. Maybe you like to bake, have a talent for crafts, or know how to wrap presents like a pro. Start new traditions with your kids like stringing popcorn, making paper chains for the tree, building gingerbread houses out of graham crackers, or watching classic holiday films.

9. Be thoughtful, not expensive

Don’t fool yourself into believing that the best gifts are expensive. Make a photo album for the grandparents, clean your mom’s garage, or take dad on a fishing trip.

10. Send Christmas cards

Instead of going overboard on gifts, be old-fashioned and send Christmas cards to your friends.

11. Shop for decorations after Christmas

Decorations are expensive, so buy them after Christmas at a reduced price and save them for next year.

12. Don’t forget to give to charity

Instead of giving Uncle Ed another tie, make a donation in his name to his favorite charity. Everyone wins!

Don’t forget to keep the right perspective: Be thankful for what you have, and prioritize true meaning of the season.

Catherine Martinez is a contributing writer for Smart Women Smart Money Magazine. She can be reached at [email protected].