Create lasting traditions this holiday season while sticking to your budget.

Colder weather makes staying home all the more inviting, so put on some cozy pajamas, indulge in some sweets and have a fun night in with loved ones.

The average American is expected to spend $902 on the holidays this year.
You can save by starting your own budget-friendly traditions.
Consider potlucks, gift exchanges and making homemade greeting cards.
Plan fun activities together like a cookie-decorating competition or movie marathon.

The average American is expected to spend a record $902 on gifts, food, decor and other seasonal items this holiday season, according to the latest consumer survey by the National Retail Federation.

Making meaningful memories with loved ones, however, doesn't have to involve hefty price tags.

Read on for nine budget-friendly holiday tradition ideas that can help you make the most of the season without breaking the bank.

1. Hot Chocolate, Cookies and a Movie Marathon

Colder weather makes staying home all the more inviting. With this tradition, you can put on cozy pajamas, indulge in some sweets and have a fun night in with loved ones.

"Set up a table with a small hot chocolate bar with different toppings, and add a plate of cookies to grab throughout the night. Then pick a few classic holiday movies and turn it into a long cozy night with your family," Grace Moser, owner of the women's lifestyle blog, "Chasing Foxes," said in an email.

2. Cookie-Decorating Competition

Speaking of cookies – if your family likes to get creative and competitive, an annual cookie-decorating competition could be a hit.

"Gather some simple decorating supplies and premade cookies, and start a fun competition to see who can make the most festive or creative designs. Whoever wins gets a small gift, is allowed to choose the movie they watch that night or do something else the family knows they like," Moser said.

3. Host a Potluck

Don't forget about the good old potluck.

"For holiday gatherings, consider hosting a potluck where family and friends bring their favorite dishes. This evenly distributes the cost for a holiday meal but also creates a sense of community," Stephanie Shields, a wealth advisor at Thrivent, said in an email.

You can also put a fun spin on it by turning it into a recipe exchange.

"Everyone can bring a favorite dish or treat and the recipe that goes along with it. You get to taste different holiday foods and take home recipes to try out later," Moser said.

4. Opt for a Gift Exchange

Buying gifts for everyone in the family can get expensive. Instead, your family can agree to a gift exchange game, like a Secret Santa. Each person is randomly assigned a person to buy a gift for and the gift giver's identity remains a secret until the end.

"You can even set a spending cap to ensure everyone can participate without financial stress. This way, each person gives and receives a meaningful gift all while keeping costs manageable and avoiding overspending," Shields says.

5. Send Kindness Cards to Neighbors or Friends

Greeting cards are a nice way to spread holiday cheer to loved ones but can get expensive, ranging from $2 to $10 or more per card.

"Instead of traditional holiday cards, make or buy inexpensive blank cards and write one kind thing you’ve noticed or appreciated about each person. It’s an affordable way to take part in lifting up others during the holidays," Moser says.

6. Share Music

Music is an integral part of the holidays and is also something you could build a tradition around.

"One holiday tradition my family cherishes is our 'vinyl holiday playlist.' I'm a big vinyl fan and I'm pleased to say I've infected my family with my passion," Seth Geftic, a dad from South Carolina, said in an email.

He explains that his family decorates the house for the holidays while listening to their favorite holiday classics on the record player.

"For us but there’s something really special about gathering around, flipping the records and enjoying that warm, authentic sound. Plus, it’s an awesome way to bring multiple generations together," Geftic says.

You could also opt for a more modern version in which the family creates a playlist together or takes turns picking the next song.

7. Start a Gratitude Jar

Consider starting a gratitude jar each year at the start of the holiday season.

"Each family member writes things they’re thankful for throughout the season, and you read them together on the holiday," Jennifer Seitz, a certified financial education instructor and the director of education at Greenlight, said in an email.

This can be a great reminder to slow down, remember what you're thankful for and share appreciation with loved ones.

8. Let Interests Guide Activities

A good place to start can also be thinking about what your family likes to do.

"Think about your family’s interests, then weave them into the holiday schedule. For example, if you love the outdoors, find a nearby nature walk where you can enjoy the winter season or go ice skating. If you love baking, everyone could choose a recipe to make an assortment of treats for neighbors and friends," Seitz said.

9. Give Back

Last, you can build a tradition that involves giving back in some way.

"The holidays can be a perfect time to start a tradition of volunteering or donating. Involve your kids in choosing where to give and what causes resonate most with them – this can help them understand the spirit of the season and create a lasting family legacy of generosity," Seitz said.

For example, you could spend a day participating in a holiday toy drive or donating new or gently used items to those in need.

"It’s also a subtle way to show your kids the 'residual value' in their belongings, as items they no longer use can still bring joy and utility to others," Seitz said.

While the holidays can be a stressful time due to all the extra expenses and crowds, traditions like these can help you make wonderful and meaningful memories without spending a lot of money or even leaving home.

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Budget-Friendly Alternatives to Expensive Holiday Activities