I know, it may feel a little early to be talking about Christmas. But hear me out! While you might not be ready to hang the mistletoe, it’s never too early to save money for the holidays. In fact, the sooner you start saving up, the better (and less stressful) the season will be.
Too many people find themselves mid-November with nothing saved, so they turn to credit cards in a panic and end up paying for Christmas until April of the next year. Not good. That’s why I like to put aside a little money each month starting in January. But if you’re just now thinking about saving, don’t worry. There’s still plenty of time to save up some cash between now and the most magical time of year. You just need a plan.
Start by creating a holiday savings fund
Think of a holiday fund like a savings account that you set up for all your holiday needs. This is where you’ll stash the money you’re saving and watch it grow as the season (finally!) gets closer.
To set your fund goal, look at how much you spent on Christmas gifts last year. Where did you overspend? Do you need to increase or lower your budget? Then, think about what you’ve got on your plate this year. How much will you be able to spend on each person at Christmas? What about parties or gatherings? Then, compare your projection with last year’s number and set your goal!
Once you’ve figured out the total you want to spend, divide it by the number of months or weeks left until Christmas. Let’s say your budget is $900 and you’re just now getting started. That means you’ll need to save $300 a month over these next three months. Make sense?
Next, boost your holiday budget
Now, the easiest way to boost your holiday budget is to cut back on spending. Way too many people think it takes a ton of money to have memorable holiday fun. What that really means, though, is your bank account will be hurting when January rolls around. Go for a cheaper celebration that helps you keep more cash in your pocket.
Here are some of my favorite ways to get the most out of that holiday budget:
1. Skip some of your traditions – Guess what? You don’t have to do Elf on the Shelf or an expensive Christmas card photo session. Save money by skipping out on traditions that you don’t truly have to do. Just look at your budget and be open and honest with your family as you decide what to cut and what to keep.
2. Cut down on the cost of gifts – You can save serious cash on presents this year—without being a Grinch. Shop sales. Use coupons. Give out baked goods. Skip the random gift exchanges. And instead of buying presents for every extended family member, have each person draw a name and buy just one gift for the person they get.
3. Turn overblown holiday feasts into a potluck – I love hosting family dinners and parties with friends, but I could easily blow half my holiday budget on one gathering. If you like to host, you can cook the main course and ask your guests to bring the sides. That way, you’re not stuck with the entire bill, and everyone feels good because they helped out.
I promise your holiday season will be much happier when you can check everything off while sticking to your budget—instead of spending first and worrying about the fallout later. And planning ahead, having a budget, and being mindful of your spending is how you make your money goals a reality this year. You’ll be amazed at how a few small, intentional changes can impact your holiday budget with tidings of great joy!
* Rachel Cruze is a two-time #1 national best-selling author, financial expert and host of The Rachel Cruze Show. She has appeared on Good Morning America, TODAY Show and Live! With Kelly & Ryan, among others. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people to avoid debt, save money, budget and how to win with money at any stage in life. Follow Rachel on Twitter, Instagram, Facebook and YouTube or online at rachelcruze.com.