As I lounged on the beautiful beaches in Dubrovnik last week, I randomly started thinking about the upcoming holiday season. Despite enjoying my summer vacation in Croatia, I realized that I didn’t have a spending plan for Christmas yet. Although Christmas is the last thing on our minds right now, it’ll be here before we know it. But without a plan, a lot of us will end up starting the new year with financial worry or worse, credit card debt. So I ask you, have you started saving for Christmas yet?
I’m not too proud to admit that in the past, I bought holiday gifts without saving. And it took me months to financially recover. But fortunately, my financial circumstances have changed drastically this year. This now forces me to carefully plan for large purchases months in advance.
To avoid stretching my budget and feeling unnecessarily stressed later, I’m approaching holiday spending differently this year. I’m going to start saving for Christmas (and Black Friday) now!
Saving For Christmas
When To Start
Although lots of people start saving for the holidays throughout the year, this may not be financially feasible for everyone. But since it’s never too early to start saving for Christmas, the sooner you start, the better. The more time you have ahead of you to save, the less of a financial strain you’ll feel on your budget in the long run.
If you need more motivation to start saving for Christmas, look at your last November and December bank and credit card statements. The average American spends over $800 USD during the holidays.
According to SwiftMoney who provides short term loans for bad credit, last year, Brits spent £753 per household. And since lots of people start holiday shopping as early as October, this confirms that no matter when you start, there’s no better time to start saving for Christmas.
Creating A Christmas Budget
“He’s making a list, and checking it twice, gonna find out who’s naughty or nice”.
More or less, this is exactly what I’ll be doing to create my Christmas budget this year.
Start by making a list of all the people you intend to spend money on. My list includes family, friends, colleagues and my favorite charities.
Next, for each person on the list, think about how you’d like to celebrate the holidays together.
Estimate how much each item on the list will cost. It’s best to over budget if anything. Remember that holiday spending doesn’t have to only cover gifts, include experiences and holiday travel too. This includes holiday parties, decorations, concerts, Christmas markets, flights and more.
Once you’ve tallied up all of your expenses, consider this year’s budget “final”. And not a penny more!
Don’t succumb to the pressures of spending more on gifts you cannot afford.
Setting A Timeline
To reach your goal by the start of the holiday season, calculate how much money you’ll need to save each month. In my case, I have three months to save (September, October, and November). So I divide my Christmas budget by three. If you prefer, you can figure out how much you’ll need to save per paycheck instead. Divide your Christmas budget by the number of paychecks left until you start shopping.
If your saving goal is unattainable, make a few cuts. And if money is tight this year, an alternative to spending money is spending time. That includes volunteering for a good cause or spending time with loved ones.
Whatever you do, just don’t tap into your emergency fund. Holiday shopping isn’t an emergency.
One way to save for Christmas is to open up a Christmas Club account. A Christmas Club account is a short-term savings account that encourages saving for Christmas throughout the year. It automatically withdraws money from your checking account. But here’s the catch – you can only access your funds once a year, at the start of the holiday season. If you have to withdraw funds early, expect to pay a penalty fee.
If you prefer to DIY, open a new bank account and name it something like “Christmas Fund”. When you get paid, automatically contribute to your Christmas budget.
Spot Good Deals
Lastly, as you save, keep an eye out for good deals. For more savings on clothing, accessories and other gifts, browse through The Hut Discounts here. This ensures that you’re using your money wisely. Maybe you’ll even have some cash leftover for next Christmas!
Have YOU started saving for Christmas yet? When do YOU usually start?
Danielle is a travel finance strategist, writer, speaker and podcaster. She paid off $63,000 of student loan debt in 4 years, bought a house at 27 and has traveled to 26 countries. She refuses to let her financial responsibilities hold her back from living life on her own terms.