3 steps to decking the halls without wrecking your budget

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Between gifts, travel and food, the most wonderful time of the year can also be the most expensive. Many Americans estimate they'll spend an additional $1,000 during the holiday season. Fortunately, with a little planning — and the right tools — you can enjoy the festivities without taking a toll on your wallet.

Whether you plan to spend $1,000 or $100, here’s what to consider to meet your goals and reduce holiday spending stress, Ally Financial suggests.

Key takeaway: 

• Many Americans estimate they'll spend about $1,000 on gifts and other expenses during the holiday season, so breaking that total into equal monthly savings targets can make the goal more manageable — no matter when you start. 

Step 1: Make a list, check it twice

To figure out how much you want to spend this season, think about what you’ll be spending your money on. Start by listing every category you'll spend on, it could look something like this:

• Gifts 
• Decorations 
• Travel 
• Meals 
• Parties or hosting 
• Donations 

Once you have a broad outline, you can start setting specific amounts for each category. For example, maybe you’re not traveling far and want to allocate more money toward gifts or decorations. You can create a bucket for every category and set savings targets for each one, so you can track your progress throughout the season.

From there, add up each category to determine your overall goal, then break it up into monthly increments. For example, if you know your total spending will be about $1,000, aim to save $250 a month between September and December. 

Step 2: Trim your spending, not the spirit

Now that you know how much you need to save, where will it come from? Look for areas where you can cut back and redirect toward the holidays. That could look like:

• Swapping food delivery or dining out for home-cooked meals 
• Pausing a few subscriptions you barely use 
• Trading store-bought coffee for home brew 
• Hosting a potluck instead of catering your holiday gathering 
• Making your own holiday cards instead of ordering custom-printed ones 
• Saying yes to a free community event (tree lighting, holiday market, library story time) instead of a paid outing 

Every dollar you redirect gets you closer to your target.  

Step 3: Create your buckets of holiday cheer

Here's where it gets fun. Once you know your target and where the money will come from, put your savings on autopilot.

Set a target amount and date for each bucket, and prioritize them by what's most important to you. Seeing your goals named (and growing) can help keep you motivated.

For a more interactive look, use a savings goal calculator to see how long it would take to reach your savings goals.

Rethink your gifting game

There's more than one way to show someone you care this season. Some of the most memorable presents cost little or nothing at all. If gifts are a large portion of your holiday budget, here are a few ways to rethink your approach: 

• Gift experiences, not things: A home-cooked meal, a movie night, or a DIY craft session can mean more than anything store-bought. 
• Go universal for hosts and coworkers: A batch of cookies or a good bottle of something is thoughtful, useful, and easy on the budget. 
• Pool resources: Team up with family for a group gift, or organize a gift exchange so each person only buys one present. 
• Give the gift of money: Cash or a gift card is often exactly what someone wants — and it keeps you from overspending on something they didn't.

Thinking about gifts beyond the holiday? Here's how much to spend on gifts for any occasion.

Make the holidays merry, not stressful

When your savings tools are doing the work behind the scenes, you get to focus on the good stuff: the people, the memories, and the moments that make the season worth it. Start early, automate what you can and let your buckets grow. And if you do overspend? Explore these five steps to recover from holiday overspending and reset your budget for the new year.

This story was produced by Ally Financial and reviewed and distributed by Stacker.