The holidays can be a challenging time of year if you’re worried about taking on debt. But anyone armed with the right adviceand a steely determination can avoid overspending this season.

Overspending is One of the Biggest Traditions of the Season

Let’s be honest — you’ve got your work cut out for you. The holidays put immense pressure on you to participate. Family expectations and an unwillingness to disappoint people can convince you to buy more gifts and accept more invitations than you can afford.

You aren’t the only one who has difficulty saying “no.”

According to last year’s holiday spending data, more than one-third of all shoppers went overboard. They racked up an averageof $1,249 in debt, putting the lion’s share of it on credit cards.However, some people use short term personal loans and Buy Now, Pay Later schemes, too.

In some ways, credit cards make it harder to follow your budget, but you can’t exactly cut them up. They’re a valuable safety net in times of emergencies, and they may be the only way you can purchase gifts online or reserve flights.

Follow These 5 Steps to Avoid Overspending

In order to cash in on credit’s advantages, you’re stuck using a financial product that can tempt you to spend more than you should.

The odds might be stacked against you, but it’s possible to keep within your spending limit this year. These tips will help you make merry without taking on debt.

Step #1: Update Your Budget

Having an updated and accurate budget is the first step to using your credit wisely all season long. This spending plan will let you know exactly what you have to spend after taking care of bills like rent, utilities, groceries, and outstanding short term personal loans.

If you’re starting a budget from scratch, check out these personal budgeting tips for beginners. The first tip suggests choosing a budgeting system as a template, like the 50-30-20 guide or envelope system. Following these templates by hand can help you become more attuned with your cash flow and aware of bad spending habits.

Step #2: Trim the Fat

Your budget gives you a bird’s eye view of your typical spending. If you notice you make a lot of small, miscellaneous purchases throughout the month, this could be an opportunity for savings. Sacrificing treats at the gas station or putting subscriptions on hold may free up cash for your holiday budget.

Step #3: Stay Away from Your Emergency Fund

If you’re disappointed by your spending limit, you may be tempted to rely on your emergency fund to boost your shopping power. All that cash is just sitting there anyway, so why not?

Don’t confuse an emergency fund with dedicated holiday savings. If you drain your fund to leave more presents under the tree, you might not have any money when your car breaks down or your child gets sick.

Dealing with these unexpected expenses is a lot easier when you have emergency savings at the ready.

Don’t worry if you used your emergency fund on an earlier expense only to run into another one this holiday. Online short term personal loans are available to help in these tricky situations. Go online to research the difference between a line of credit and installment loan to determine which one is better for your emergency.

Step #4: Treat Your Credit Card Like it’s Cash

The problem with credit cards is that they give you way more spending power than you would normally have. While some accounts may only be worth $500, others have $50,000 worth of credit available. That’s bigger than most short term personal loans.

While your card’s limit probably falls closer to $500, it’s still more than you usually keep on you in cash. Cash gives you a hard spending limit to the bills in your wallet. Once you run out, there’s no more available.

Credit, on the other hand, can help you blow past your limits without even realizing it. New research shows using a card stimulates the brain’s reward system, encouraging you to buy more.

Compared to your checking account — or even an online loan — the plastic in your wallet can feel like an endless supply of money. Unfortunately, that couldn’t be further from the truth. Any money you use here is an IOU you promise to pay off.

If you spend more than you can pay, you’re stuck with a revolving balance subject to interest and finance charges. In other words, you’ll spend even more any time you carry over a balance.

To avoid this kind of debt, only ever charge something to your card if you can afford to pay it off in full by your billing statement. If you have online banking, you can pay off purchases as you go.

Step #5: Understand Your Card’s Perks

Using the plastic in your wallet isn’t always gloom and doom. If you use your card like its cash, this account comes with many perks that can make the season go a lot smoother.

The Takeaway:

It may be unrealistic to stop using credit around the holidays, but this financial product does open the doors to debt. Understanding its purpose in the holidays can help you avoid getting a lump of coal in your proverbial stocking.