We spend a lot of money on the holidays. This year, Americans are expected to drop an average of $1,638 on gifts, travel, and entertainment.

But you don’t have to have a financial hangover in January to have a great holiday season now. With some planning — and a few strategic moves — you can minimize the impact of holiday spending on your budget and enter the new year in a stronger financial position.

Set a holiday budget and stick to it

The first step in managing holiday spending is setting a clear budget. Your holiday budget should include all expenses — gifts, decorations, food, travel, and charitable donations. Having a specific number in mind will help prevent impulse purchases and keep you from overspending.

Once you have a budget in mind, stick to it.

Set a spending limit as a family

Are you struggling to figure out what your budget should look like? It can be hard to tell if you’re overspending around the holidays. One way to get some clarity: ask around.

Talk with your family and friends to set a spending limit for each gift. Once you have a limit, list everyone you want to get a gift for and use that to calculate your max spend.

Cut expenses you don’t need to save money

While you’re looking at your holiday budget, it might be a good time to look at your overall budget. By trimming some of the fat, you’ll free up extra cash for the holidays or just provide yourself with a bigger financial buffer to cut back on the holiday stress.

For example, if you have subscription services you’re unlikely to use in the winter — like pool or park memberships — canceling until you’ll use those services again can save a lot.

Start early to snag deals

The holiday shopping season seems to start earlier and earlier every year, which means the best deals may not happen between Black Friday and Christmas.

Look out for pre-holiday sales, online deals, and flash sales to snag gifts at lower prices as early as possible. Use price comparison tools or apps to track price changes for items you're interested in. By shopping slowly, you can also avoid the temptation to put everything on a credit card, resulting in hefty bills come January.

Use rewards, coupons, and cashback offers

If you regularly use credit cards with rewards programs, the holiday season is a great time to redeem points or miles for gifts, travel, or holiday essentials. Many credit cards offer holiday-specific promotions, like increased cashback on certain categories, so make sure to check if any of your cards offer such deals.

Coupons and cashback apps can also significantly impact your holiday spending. Additionally, many retailers offer online coupon codes and discounts during the holiday season. When you’re shopping online, make it a rule to always check for a promo code before you head to checkout.

Plan ahead for travel expenses

If holiday travel is part of your plans, now is the time to start preparing to reduce the financial impact. Travel costs can spike around the holidays, but there are several ways to save. Booking flights and accommodations early can sometimes lock in lower rates. If your schedule allows, consider traveling on off-peak days, such as weekdays instead of weekends, or flying on the holiday when prices may be lower.

Using travel rewards or miles is another excellent way to offset travel expenses. If you can't redeem rewards, use price comparison tools to find the best deals on flights and hotels. Consider driving instead of flying for shorter trips and looking for ways to save on gas or tolls.

Start a holiday savings fund

Want to get a jump start on the next holiday season? Set up a dedicated savings fund early in the year and contribute a small amount each month. By the time the holidays roll around, you'll have a pool of money for gifts, travel, and other holiday expenses. This approach allows you to avoid relying on credit and entering the new year with holiday debt.

If you didn’t set up a savings fund this year, it’s never too late to start planning for the next. Use your experience from this holiday season to estimate how much you’ll need, then start saving.

Holiday spending doesn’t have to lead to financial stress. You can enjoy the season without compromising your financial well-being by setting a budget, planning ahead, and using strategic savings techniques.

Want to simplify the financial side of the holidays? Consider setting up a Sub-Savings account. In just a few minutes, you’ll be ready to put funds aside in a dedicated account separate from your Primary Share Savings.