5 tips to avoid overspending this holiday season

(NewsNation) — The holiday shopping season is in full swing, and that means an urge to spend, but there are steps you can take to keep your finances on track.

Between gifts, food and decorations, consumer spending on the winter holidays is expected to hit a record $902 per person this year, according to the National Retail Federation.

But the holiday fanfare can also lead to pressure, pushing families to spend beyond their means.

Nearly half of Americans feel the most stressed about their finances around the holidays, and this year, about a third of consumers are heading into the shopping season with more than $5,000 in debt, according to a recent CreditKarma report.

A separate NerdWallet survey found many credit card users, nearly 30%, are still paying off last year's holiday debt.

"It's really important for people to remember that the holiday season will end, a New Year is coming, and they're still going to have to come face to face with their finances," said Elizabeth Ayoola, a personal finance expert at NerdWallet.

Here are five things you can do to avoid overspending this holiday season, according to experts.

1 - Set a budget (and expectations)

Ayoola recommends creating a holiday budget and breaking it into separate spending buckets like gifts, travel, food and decorations. Once you have a spending limit for each category, track your expenses and stick to it.

According to NerdWallet's survey, just 27% of holiday shoppers have a strict budget for the amount they will spend on gifts this year.

If you're unsure where to start, look at what you spent last year. Analyze your previous card statements to understand your habits and identify areas you want to improve.

Most importantly, be honest with yourself — and your loved ones — about what you can afford. A transparent family conversation can go a long way.

"Setting those expectations can take the pressure off of you," Ayoola said.

The Consumer Financial Protection Bureau has a free budgeting tool to track expenses. NerdWallet also has an online budget worksheet.

2 - Avoid 'spaving' this holiday season

Many online retailers offer free shipping once you spend a certain amount, but that deal, and others like it, can also lead to a common pitfall known as "spaving" — spending more to save more.

Credit Karma's survey found that 40% of Americans are more likely to "spave" while holiday shopping. And nearly as many, 37%, say they typically spend money on themselves while shopping for others.

Online deals can be especially tempting during the holidays when companies ramp up their web promotions, but be careful not to overextend, chasing savings with bonus items outside your budget.

According to NerdWallet, nearly 30% of consumers bought something they weren't planning on during an annual sales event in the past year.

Shopping with intention and sticking to a plan is one way to prevent spaving. Another tactic: link to specific items on your wish list.

"By linking to the products you want, you can easily add those to your shopping cart without having to peruse the site, which often tempts us to add more than we need to our shopping carts," Courtney Alev, a consumer financial advocate at Credit Karma, said in an email.

3 - Consider paying with cash

NerdWallet's survey shows most shoppers (74%) plan to use a credit card for at least some of their holiday gift purchases this year, but research suggests paying with cash may be a better option.

That's because studies have shown consumers tend to spend more when they use payment methods other than cash.

Part of that is due to a psychological effect known as the “pain of paying." It hurts more to hand over physical cash than to swipe a card, and that negative emotion can cause us to spend less.

Shopping with credit is especially expensive this year, with some store cards charging upwards of 35% interest. Rates on traditional credit cards are also at record highs.

"With high interest rates on many credit cards, it may not be a smart idea because of all of the interest that you're going to stack up," Ayoola said.

Total credit card debt rose to a record $1.17 trillion last quarter, and according to TransUnion, the average debt per borrower now stands at at $6,380.

4 - Take a break from social media

More than a quarter of consumers (27%) in Credit Karma's survey said social media pushes them to overspend during the holidays. That was especially true for Gen Z (46%) and millennials (37%).

If you find it hard to resist those highly-targeted digital ads — or feel extra pressure to "keep up with the Joneses" — consider logging off Facebook and Instagram until the holidays are over.

The same logic applies to promotional emails. Don't be afraid to unsubscribe from stores you like to shop at — you can always sign up again later.

If you don't want to log off TikTok or Instagram, you can also tweak your account settings to show fewer personalized ads. You might find yourself less tempted to shop.

5 - Create shopping hurdles

Spending money has never been easier, so make it harder if you're trying to cut back. Create small obstacles and inconveniences to stop impulse buys.

One tip: Remove your credit card details from your web browser so you have to manually enter them each time.

"This will add an extra layer back into your decision-making process, helping you think before you purchase," Alev said.

It could be worth going a step further.

"I've even blocked websites where I know I tend to impulse spend," Ayoola said.

Above all, Ayoola thinks it's helpful to look ahead and set financial goals for the new year. From there, work backward to ensure your holiday spending aligns.

"That way, I have something to look forward to and to reel me back in from spending," she said.