How to Avoid a Financial Holiday Hangover

By Rachel Cruze

During the holidays, it’s so easy to get wrapped up in the spirit of giving — even after everyone’s been checked off the list. Just one more action figure for your nephew. One more mystery novel for your aunt. One more chew toy for the dog. It doesn’t feel like much in the moment … until you look up and realize December cost way more than you planned. (If you even want to look.)

In the moment, giving those gifts feels great. But when the credit card bill shows up, or your bank account is drained when it’s time to buy groceries or pay bills, guilt and regret can rush in fast. I call this a financial holiday hangover. And if you’re feeling it, you’re not the only one. Studies show that 39% of holiday shoppers have regretted spending too much.1

If that’s you, take a deep breath. I’m going to help you fix it. With a little planning, you can enjoy the holidays without dragging debt into the new year.

The Real Cost of Holiday Debt

First, let’s be real: A lot of us have a spending problem around Christmas. Nearly half of people who planned to spend on holiday gifts and travel this past season expected to go into debt. And of those who used a credit card, more than half didn’t plan to pay that balance off when the bill arrived. Even worse, 17% said it’ll take more than six months to clean up the mess.2

No wonder so many people are suffering from holiday hangovers! It’s hard to enjoy giving when you’re still paying for it in March. No matter what a sneaky credit card commercial tells you, debt doesn’t fix holiday pressure. It only pushes it into next month ... with interest.

So, what’s the fix? We start now, so December doesn’t boss us around later.

The Cure Starts in January: A Christmas Sinking Fund

Just like Kevin McCallister in Home Alone, you need a plan. Set a goal, prepare ahead of time and stick to it (even when the holiday chaos hits). And don’t worry, this plan is way easier than rigging paint cans and setting up a blowtorch-on-the-doorknob situation.

Here’s the simple cure: Start a Christmas sinking fund. That just means you save a little money every month beginning in January so when December rolls around, Christmas is already paid for. No debt. No regret. Future you is going to feel so proud.

Not sure how much to save each month? Do this:

• Look at what you actually spent this year (gifts, travel, food, giving, décor).
• Divide that number by 12 months.

So, if your Christmas target is $1,200, that’s $100 a month — basically $25 a week. That’s a couple of drive-thru runs or one Target wander you didn’t do. Small monthly amounts beat a big December scramble every time.

A Simple Holiday Budget That Works

Saving ahead is step one. Step two is putting a few boundaries in place so you stay on budget in December.

• Open a separate account for your sinking fund. If you keep all that Christmas money in your main account, it’s way too easy for it to “accidentally” get spent on regular life before December ever gets here. So do yourself a favor, and stick it in its own savings account where it won’t get mixed in with groceries and gas. (Just make sure it’s a simple account with no minimum balance requirement.)
• Decide your budget categories ahead of time. Categories turn “save for Christmas” into a real plan. When you name what you’re spending on — gifts, travel, meals, generosity and kids — you’re giving every dollar a job before the season starts. Then those categories keep you from blowing the budget in one spot and reaching for a card to cover the rest.
• Make a gift list with dollar limits. Take your gift budget and assign a spending cap to each person. If the math doesn’t work, adjust the list or the amounts until it does. And if you come in under budget on someone, you get to choose where that extra money goes instead of wasting it.
• Use cash or debit to stay on track. Credit makes overspending feel painless in the moment. But when you spend real money tied to a category, you notice the total. The rule is simple: When the category is empty, you’re done. That might mean fewer gifts or a simpler meal, but it also means no January regret.
• Track what you spend. You can’t stay on budget with your eyes closed. Write down every purchase or log it in a budgeting app, even cash ones, so you know where you stand. (And no pretending it didn’t happen because it was “just $8.”)
• Start early and shop smarter. Most overspending comes from waiting until the last minute and paying urgent prices. Spread your shopping out, catch deals and skip the panic-buying. The earlier you start, the more control you have.

With guardrails like these, your sinking fund doesn’t just disappear. It does exactly what you saved it to do.

Keep the Joy, Lose the Regret

You can’t change what happened in the past, but you can control what happens next. And there’s no better time to start than now. So, plan your budget, start a sinking fund and watch your Christmas fund build all year long.

Christmas joy isn’t found in bigger spending. It’s found in giving with an open heart — and that’s hard to do when money is tight and debt is looming. But when you plan ahead, you’ll be able to enjoy the holidays without worry, fear or regret. The best gift you can give yourself next year is waking up in January not owing a penny for December!

* Rachel Cruze is a two-time #1 national bestselling author, financial expert, host of The Rachel Cruze Show and co-host of Smart Money Happy Hour. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people how to avoid debt, budget and win with money at any stage in life. She’s an energetic and thought-provoking speaker and has been speaking to audiences as large as 10,000 since the age of 15 when she began making appearances with her father, Dave Ramsey. She has appeared on Good Morning America, Today, Live With Kelly and Ryan, CNN Tonight, Fox and Friends and the Rachael Ray Show and has been featured in the Woman’s Day, Success and Real Simple magazines. Rachel believes it’s possible for anyone to turn around their finances, win with money, and build a life they love. Follow Rachel on YouTube, Instagram, TikTok, Facebook and X.