It’s Time to Start Saving for the Holidays

Saving MoneyHear those sleigh bells ringing? Nope, neither do we, and that’s the point! The holidays may feel like a long way off, but that’s exactly why you should start saving for them right now.

Every year, the vast majority of us refuse to remember how expensive the holidays are until right around November when we look at our checking accounts in dismay and curse ourselves for not saving in advance.

Don’t fall into this trap again. You know exactly where it leads – to a desperate credit card spending spree that will leave you in a depressing debt hole in January.

How Much Do the Holidays Cost?

You’ve been on the holiday spending merry-go-round enough times to know the holidays are expensive, but you might not realize exactly how expensive they are. Before you can start saving for them today, it’s a good idea to have a savings goal in mind.

According to the American Research Group, in 2015 the average American shopper planned to spend $882 on holiday gifts. Yikes! That’s a lot of money, but it’s only the beginning. Also, consider the cost of:

  • Travel– Gas, plane tickets, hotel rooms
  • Food – Are you hosting Thanksgiving, Hanukah, or a family Christmas dinner?
  • Activities – The in-laws are in town and the kids are out of school. They’re going to expect some activities

All-in-all, you might need to save anywhere from $1,000 to $3,000 or more depending on your unique circumstances. (If this seems like too much, check out this article on Holiday Shopping Tips to keep You from Breaking the Bank.)

How to Start Preparing for the Holidays Now

Holiday Savings Account

The easiest way to prepare for the holidays is to simply open up a savings account with your bank dedicated specifically to holiday costs and make an automatic payment each month. Figure out how much you want to have by the time the holidays roll around and then divide that by the number of months before November, and you’ll get the amount you need to put in the account each month. If you do this at the beginning of the year, you may only need to put in $100 or less a month to save up enough in time. Even if you can’t put in the full amount in each month to reach your goal, try putting in something! Even $50 can cover holiday presents so you don’t have to worry about that cost.

Early Bird Special

Another option is to buy a few gifts each month and hide them away in the closet. This is a good option if you come across special deals, like ski gear on clearance in July. This tactic not only helps you gradually collect all the presents you’ll need for the holidays, but it also saves you from the stresses and huge time suck of holiday shopping. No more driving around the mall parking lot for 15 minutes trying to find a parking spot! (Here are Five Big-Ticket Items You Shouldn’t Buy During the Holidays.)

Let Your Credit Card Pay for the Holidays

One last nifty option is to save up all of your credit card points and then use them either to pay for your travel and accommodations during the holidays or cash them out as a credit that can be used to buy food for big family meals and presents. Nerd Wallet offers useful credit card comparisons that let you find cards with the best rewards programs.

Saving for holiday spending today can save you a lot of stress down the road. You can actually enjoy the holidays this year instead of feeling guilty about the debt you just loaded onto your credit cards. For even more advice on this topic, learn Ten Ways to Save at Christmas without Looking Like a Cheapskate, or check out our entire Budgets and Planning article archive.

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  1. […] By Candace Bahr, CEA, CDFA and Ginita Wall, CPA, CFP® […]

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