As the holiday season looms barely nine weeks away, it’s time to devise a strategy for footing those Christmas bills. The average American family reportedly spends an extra $750 over this festive period, which can prove a substantial sum for many.
Reflecting on our own experience, my husband and I were caught unprepared when the festive season sprung upon us last year. Even though we had an extra paycheck in November to help us through, we found ourselves financially strained, starting the fresh year in a financially brittle state.
To avoid repeating the same pattern, we pledged to approach this year better prepared. Commencing in February, once our debt from the 2012 holiday season was cleared, we started depositing $50 from each paycheck into a Christmas Savings account with Capital One 360, an online savings scheme. The benefits of online savings are twofold. Firstly, the interest rates are generally superior to standard banks, and secondly, the access to money is slightly restricted, as transactions take a couple of days to complete, reducing impulsive withdrawals.
Around mid-summer, we had amassed $800 and temporarily ceased our contributions, assuming that would suffice for the festive expenses. However, considering the additional expenditure I usually incur around the holidays, we resumed our contributions, hoping to accumulate an emergency cushion of $1,000. After all, we have a penchant for grand festivities.
If you’re yet to formulate a plan, don’t panic. With nine weeks still left, you have ample opportunities to save for the season.
Tips for Saving for Christmas:
1. Initiate a savings account – You likely have four paydays before the gift-buying spree kicks off. Try to stash away $100 from each paycheck—or whatever sum you can stretch to—and you’ll potentially have at least $400 saved up. The key is to transfer this amount as soon as you receive your pay and consider it already spent on presents. If you postpone it until after you’ve covered all other expenses, there’s a risk nothing will be left to save.
2. Reduce existing expenditures by 10% – Endeavor to slash your variable costs by 10%. Opt for more budget-friendly meals, like pasta and beans, instead of meat to curb your grocery bills. Synthesize your errands or consider carpooling to decrease fuel costs. If you manage to reduce your spending by 10%, it can provide a cash influx for the festive season.
3. Leverage your credit card rewards – Any accumulated credit card points can now be what you need. It’s an ideal time to convert them into gift cards: they can be used to purchase presents or given as gifts themselves.
4. Devote $5 a day – If squirreling away $100 weekly or per paycheck seems daunting, start with a daily contribution of $5. Most of us wouldn’t hesitate over a spontaneous purchase of a coffee or lunch. Redirect these discretionary spendings into your Christmas Savings, turning it into a more manageable daily commitment rather than a hefty monthly deduction.
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