How To Set Firm Financial Boundaries During The Holidays

'Tis the season for overspending and wrecking your credit? According to a 2023 Gallup poll, the average American plans to spend around $923 on holiday gifts. However, not everyone has that much money to spare. That might be why, in a survey by Trustpilot, one in three shoppers admitted they would be willing to go into credit card debt to cover holiday expenses, and two in five would consider spending less on essential purchases (such as food) to make ends meet.

Even if those decisions sound like a bad idea, it's hard not to get swept up in the holiday spirit. "So much impulsivity at the end of year is the result of a perfect storm. We have retailers holding sales and doing promotions you don't want to miss out on, plus peoples' emotions are heightened with festive displays," Ashley Lapato, a YNAB personal finance expert better known as @TheOrganizedWallet, explained to CBS News. "That brings a lot of stress, already having money spoken for when you get paid in January, and the money goes to things you bought in November."

That's where boundaries come in. Setting personal limits around your spending and financial decisions can protect you from post-holiday regret and from serious consequences, such as runaway debt and missed bill payments.

The word "boundaries" is thrown around a lot these days, but not every influencer or self-help devotee uses the term correctly. According to PsychCentral, boundaries are "the lines we draw for ourselves in terms of our level of comfort around others." They exist in every interaction, whether explicitly communicated or not. And, chances are, if you haven't given much thought to your boundaries, your personal lines may be weak or easily manipulated by others.

The same concept applies to financial boundaries. These boundaries exist whenever you engage in a financial decision, particularly when other people are involved. "Money boundaries are limits that you put in place to protect how you feel and to protect your finances," Aja Evans, a licensed mental health counselor and financial therapist, shared with NerdWallet.

Financial boundaries are essential any time of year, but during the holiday season, they're especially crucial. A sibling may expect you to splurge on a gift for your nephew, or your friends might pressure you to contribute funds for a huge Christmas bash. Internally, too, you might push yourself to indulge more and shell out money on lavish expenses (a fancy gift for your partner and a set of overpriced personalized ornaments? Sure, why not?). Setting boundaries — with yourself and others — can help you make smarter choices.

Financial boundaries aren't one-size-fits-all. You have to determine your own limits based on your aspirations and personal needs. And when it comes to financial boundaries during the holidays, that means zooming out and considering how you want to feel about your money far after the festivities are over.

To do this, start setting financial goals. Just like boundaries, financial goals are highly individual and depend on your unique circumstances. However, financial counseling agency Credit.org suggests starting with building an emergency fund, followed by paying off debts, setting up a retirement plan, and saving for big-ticket purchases like a new phone or a house. Consider your own wants and needs, and devise short-term, mid-term, and long-term goals that reflect them.

Then, compare these goals to your holiday expenses. You may decide that pricey gifts aren't worth missing a student loan payment over. Or you might realize that the cost of flying home for Thanksgiving will force you to use money from your emergency fund. Even if holiday expenses seem necessary at the moment, they could have a lasting impact on your financial goals later — and that means a financial boundary is probably in order.

One of the best ways to set defined financial boundaries is to get clear on how much you can actually afford to spend on gifts, parties, and holiday decorations. First, if you don't have one already, write up a budget for everyday spending. Include the cost of housing, utilities, food, toiletries — anything you generally pay for each month. Be sure to factor in your financial goals, too (for example, stashing 5% of your monthly income in your emergency fund). Then, commit to keeping money aside for each item on your budget, even (and especially) during the buy-buy-buy holiday season.

To keep track of your transactions, try using mobile banking apps, as Sonali Divilek, head of digital channels and products at Chase, suggested to CNBC Select. You can also download budgeting apps that connect to your bank or credit card account and categorize your spending so you can quickly visualize where your money is going.

When it comes time to set clear boundaries, look honestly at what your budget allows. If you're eyeing a pricey gift, but the math isn't matching, respect your personal limits and remove it from your cart.

Once you've started to pinpoint your financial boundaries, share them with other people in your circle. Rachel Hoffman, a licensed clinical social worker and chief therapy officer at Real, told HuffPost that it helps to communicate your limits early in the holiday season. "That might look like texting your friends that you would prefer to set a $20 cap for the gift exchange or simply opting out of that part of the party this year," she explained.

If communicating boundaries feels intimidating, try softening your message with "I" statements. "I statements show confidence and good boundary setting by expressing thoughts, feelings, and opinions without worrying what others are thinking," Judith Belmont, a mental health author and licensed psychotherapist, revealed to Healthline. For example, you might say, "I appreciate the invitation to your Christmas party, but I'm feeling a little overwhelmed with holiday expenses this year and won't be able to participate in the gift exchange."

Your financial boundaries don't have to dampen the holiday spirit. You may decide against offering gifts to every co-worker on your team or attending every holiday event in your city, but you can still spread some cheer without maxing out your credit card. Start by considering what the holidays mean to you — whether that be quality time with family or helping those who are less privileged — and then come up with creative alternatives that honor your financial boundaries.

For instance, let's say you consider family to be at the heart of the holidays. Rather than splurging on gifts for every family member, offer to organize holiday-themed family games or cook a beloved family recipe. If you appreciate the generosity associated with the holidays, skip store-bought presents and craft homemade ones instead. Or give the gift of time and service by volunteering for a local charity or planning a (low-cost) holiday potluck.

Brainstorm these alternatives in advance and, if you experience pushback for your boundaries, discuss your ideas with your loved ones. They may be quicker to understand and respect your boundaries when given options to choose from rather than receiving a hard "no."

If you're new to setting boundaries around your holiday spending, you may realize that you need to tweak your limits here and there as you go. Part of that involves noticing when a boundary has been crossed and working to strengthen that line. The simplest clues to watch for: regret and resentment. Dr. Carla Marie Manly, a clinical psychologist, told RealSimple that neglected boundaries can often be spotted by people-pleasing tendencies and feelings of being disrespected or taken advantage of by others. If you give in to the pressure to spend money and feel bitter about it later, consider it a sign to enforce that boundary next time.

Even when there's no external influence, you may still notice remorse after making a holiday purchase. "Check in with yourself and recognize when you feel bad about spending money," Aja Evans told NerdWallet. "Say you go out to dinner with friends and agree to split the bill but end up paying for more than what you actually ate, and then you feel uncomfortable about what you spent. That could be a good place for a money boundary." The same goes for Friendsgiving dinners, New Year's parties, and Secret Santa exchanges.

You know your financial boundaries are important, but admittedly, you're also experiencing a bit of FOMO. Now what? Instead of bending your boundaries for the sake of having fun, try embracing JOMO (the joy of missing out) this holiday season instead. "The meaning of JOMO is really embracing the idea of just finding joy and contentment, of opting out or missing out on activities, and prioritizing your self-care," Dr. Susan Albers, a psychologist, explained to Cleveland Clinic. "It's helpful because it really puts a greater focus on consciously choosing what you want to participate in, not what you feel pressure to participate in."

JOMO can come in handy any time, but embracing it during the hectic holidays can reduce end-of-year stress and financial fallout. Plus, it can help you stay committed to your personal boundaries and money goals (why go out on a freezing night when you can stay cozy for free at home?) However, note that JOMO doesn't mean you have to turn down every event invite. "[It] might look like committing to saying 'yes' to just your top two or three holiday-related events and building in more time to cozy up at home with a good book or a loved one," Kaitlin Soule, a licensed marriage and family therapist, shared with HuffPost.

Communicating and upholding your boundaries is a sign of self-respect. With that said, it's okay to alter boundaries in some situations. As PsychCentral explains, healthy boundaries should be flexible and allow exceptions when necessary.

Before rewriting a financial boundary, though, make sure to check in with yourself and understand the consequences of adjusting your limits. One common mistake, especially given the social and familial pressures that pop up during the holidays, is believing that loosening your boundaries will guarantee smoother relationships. As Dr. Julie Gurner, an executive coach and psychologist, shared with Martha Stewart, "Knowing (and standing by) your financial boundaries helps to preserve your relationship with those you love, and keep it on solid footing." In other words, your financial boundaries will strengthen your relationships, even if you experience guilt or resistance at first.

This can be seen in data from a 2022 CreditCards.com poll. In the survey, 59% of respondents experienced negative consequences after lending someone money, and 26% said their relationship with the borrower was damaged as a result. Though you might not be lending money this holiday season, obligatory gifts and other purchases could have the same effect. Remember, the holidays are temporary, but the financial sacrifices you make can be permanent.