How to tell your friends and family you're spending less on the holidays

The holidays can be magical, but let's face it, this time of year can also be financially fraught. Between endless gift lists and the pressure to host "perfect" parties, it's easy to feel overwhelmed and overspend. 

Budgeting for the season can be especially tricky because money is never just about numbers; it's tied up with emotions, family dynamics and the weight of social expectations. After all, holiday spending isn't just about managing your own finances — it often involves giving to and celebrating with the people you care about most.

To tackle this issue, I turned to two experts: Vera Cheng, a psychotherapist and founder of Talk Therapy with Vera in Toronto, and Shaun Maslyk, an Edmonton-based certified financial planner and host of The Most Hated F-Word, a podcast about the connection between money and well-being. Together, they offered insights on staying financially grounded during the holidays without sacrificing the joy they bring. 

Why taming holiday spending can feel hard

Even if we feel okay about cutting back on ourselves, we still may feel pressure to spend around the holidays. As Maslyk observed, "We have this societal expectation to give gifts. It's like a collective agreement that we've made." He and Cheng note that opting out or spending less can sometimes trigger guilt or shame.

It's also common to worry about being judged, said Cheng, but she offered a reassuring bit of advice: "You think people are judging you … but they're probably not." Often, the pressure we feel, she said, comes from our own beliefs about money, many of which are rooted in childhood experiences.

Facing those emotions can be challenging, but it's a necessary step to gain control over our finances. "A lot of us, we don't like to sit with feelings, or we don't know how to process our feelings," said Cheng. If she felt pressured into giving gifts, she explained, she'd reflect on the source of that pressure and ask herself whether it's something she needs to work through with her therapist.  

The goal is to understand that it's reasonable to set limits on holiday spending. "It's OK [that] I can't do it all. Like, giving myself permission," said Maslyk. "I don't want to criticize myself and judge myself for not being able to do it."

Be honest and start early

If you want to make gift exchanges and holiday get-togethers less expensive, you'll probably need to have some awkward conversations. But setting financial boundaries can be challenging for everyone involved. "When it comes to money and all these conversations, it's just so uncomfortable, we just tend to avoid it," said Cheng. 

Both experts recommend being as straightforward as possible. "If you have a good relationship with the person, you can be authentic," said Maslyk. "You can tell them about this financial boundary that you have."

And timing matters. If you want to put a spending cap on gifts, warn people before they start shopping. This means floating the secret Santa idea as early as possible. If you want to plan a potluck as an alternative to a pricey meal out, get yourself into your loved ones' calendars in good time.

Back to basics: budgeting and saving ahead

One of the most common errors in dealing with holiday finances is to ignore them. "Too many people do the ostrich effect," said Maslyk. "[They] stick their head in the sand and just look at the bank balances and the credit card come January 5th, and then anxiety and stress comes in."

His advice is to plan ahead. Evaluate your income and expenses and decide on a holiday budget that works for you. Once you've done that, it'll be easier to decide which individual expenditures fit into it — and which don't.

To give yourself a little wiggle room, Maslyk recommends setting up an automated savings each month throughout the year. You may not notice $50 less in your monthly budget, he said, but that extra $600 at the end of the year will make the holidays less daunting.

Focus on what matters

What are the holidays really about? "Most people don't say, unless [they're] under 12, [that they're about] the gifts," said Maslyk. "For most people, it's about … the spirit that we feel in the air." In other words, the gifts and gatherings are all means to an end, and that end is connection and community; in Maslyk's words, "holiday magic."

Keep that perspective in mind when planning your holiday expenditures: a thoughtful card can express as much appreciation as an expensive gift, and hosting a potluck can provide as much merriment as a restaurant dinner. Find something that brings you together and expresses your appreciation for others, and you can't go wrong.

Instead of dinner and drinks, Maslyk suggested alternatives like outdoor skating, enjoying hot chocolate or even trying an ice-carving activity. Shared experiences like these "could be more memorable and lasting than doing the dinner again and again."

Maslyk also suggested volunteering at a charity as a group. You're not just helping others, he argued, you're helping yourself: "The research on giving to others is [that it is] a really effective way to increase our well-being."

The holidays can feel financially overwhelming, but remember that you aren't the only one who feels squeezed this time of year. Chances are a lot of your people would also love to cut their holiday costs but are too afraid to bring it up. If you can help start some more affordable traditions, your friends and family will thank you every year.