End of year holidays (Thanksgiving, Christmas, Hanukkah, Kwanzaa, New Year’s) tend to bring about stress for a lot of families. Traveling, planning family get-togethers, work events, finding the perfect gift–it can be overwhelming and steal a little holiday cheer from the season. Take the financial stress out of your next holiday by planning early (think Christmas in July!) and following Blue Pixel Finance’s 5 Steps to Save Money for the Holidays.
1) Determine your Budget
The first step in a financially stress-free holiday is budgeting. To create a holiday budget, simply do the following:
- Pick your favorite budgeting software (YNAB, Excel, Google Sheets, or another budgeting app) or get a pencil and piece of paper–whatever is most comfortable for you.
- Make a list of holiday categories outside of gift-giving and determine the appropriate dollar amount for each:
- Decorations (lights, outdoor decorations, linens, etc.)
- Food & Drink (remember potlucks, any meals you’ll be hosting, or other traditions involving food)
- Travel expenses (include gas, lodging, meals, and any other typical expenses)
- Clothing (any extra gear to get you through the cold)
- Charity (any typical or desired giving amounts)
- Cards & postage (don’t forget photo costs if you also include those)
- Cost of shopping (gas and parking)
- Make a list of all the people you plan to shop for during the holiday season, and set a price next to each name (that you won’t go over). Remember to include:
- Service Providers (hair, nail, mail carrier, trash, and other service providers you’d like to gift to)
- Add up all of the amounts in each line above
- Ensure your numbers are reasonable (don’t plan to spend $5,000 if you don’t plan to save that much) and revisit each line to get to a number you are comfortable with spending
A couple of tips to help pare down the gift-giving area of your budget if it seems high:
- Consider a gift exchange (sites such as SecretSanta can help) with relatives if you have a large extended family
- Buy only for the kids, rather than the kids and adults
- Buy one present for a whole family, rather than each individual within the family
- Send a card rather than purchasing a present
Use your final number as your holiday savings target.
2) Save Early!
Give yourself a few months to save this amount so that you don’t have to put holiday expenses on a credit card that you can’t immediately pay in full. Summer is a great time to open a special saving account for the holidays if you don’t already have one. There are many online banks that allow you to open up fee-free accounts with no or low minimums (and can even earn you a little in interest). A few suggested places to consider: Discover Bank, Synchrony Bank, Ally Bank. If you need more suggestions, we recommend checking out BankRate and looking for the best online savings account with no fees and low minimums to open.
Plan to contribute regularly over the next few months so that you’ve got all the money you need for the holidays and aren’t scrambling to pay for things. The easiest way to determine an amount to save is to take your final number (let’s say it is $1,000) and divide it by the number of months you have to save (we’ll use 5 months in this example). You’ll get a dollar amount ($200) to save each month in preparation for the holiday. Put this money into your online savings account each month.
3) Shop Smart
Everyone loves a good deal. Once you’re ready to shop for the people on your list, make sure you’re getting the best deal by doing the following:
- Shop early–holiday time isn’t always the best time to find your gifts. Once you’ve got your list, be on the lookout and pick up deals even before the holiday season starts if you can.
- Check out websites and store ads for the best deals on items you are considering purchasing. We love SlickDeals!
- When you are making a purchase, take the time to price match–we’ve got a great blog article on how to do it. It only takes a few seconds and guarantees you’re getting the most competitive price.
- Consider shopping secondhand–thrift stores, online exchanges such as OfferUp or Facebook Marketplace, garage sales, and eBay are just a few places you might find gently used goods that are perfect for your loved ones.
- Use coupons to stack deals–this means finding an item and adding any applicable discounts to the purchase of the item (as many as the retailer will allow). This includes manufacturer coupons, store coupons, rebates, and store rewards.
- Use rewards apps such as Ebates (now Rakuten) or Ibotta to earn cash back on your online purchases
Don’t be tempted to splurge or over-spend; if it’s not on your list or it’s more than you planned on paying, don’t buy it. Sticking to your budget will keep your stress low–it’s worth it!
4) Track, Monitor & Pay
You’ve got your budget, you’re saving for the holidays, and you found a great deal by shopping smart. What’s next? Executing your holiday spending plan! Follow these steps to track your purchases and pay for them appropriately:
- Track the items you purchase and write down the amounts on your holiday budget (use your budget app or spreadsheet to do so)
- Monitor your budget to make sure you aren’t overspending
- If you are, save extra or consider a side job to make a little extra money (food delivery, Uber, odd jobs for friends/neighbors)
- Try paying with cash to avoid overspending
- Transfer the money out of your holiday account and take it out as cash when you’re ready to go out holiday shopping
- If you need to online shop, try paying with a debit card
- Transfer the money out of your holiday account to cover your purchase
- If you prefer a credit card, do your best to pay with a card that has no balance
- Transfer the money out of your holiday savings account to pay the credit card bill
- Avoid paying on a credit card with a balance if at all possible
- If this isn’t possible, do your best to pay off the full balance of the credit card as soon as possible; otherwise, you cost yourself a lot of money in interest charges
5) Finish Strong
After the holidays, make a note on your calendar to pick up discounted wrapping paper, decorations, and other holiday essentials you can use for next year. Many of these items are half-off or more at stores after the holiday–huge savings!
It also never hurts to save throughout the year for the holidays. If you already have your online account set up for savings, consider adding to it on a regular basis, rather than waiting until Summer or Fall to plan for next year’s expenses.
The Bottom Line
Holidays should be a time of joy and happiness without stress. Having a financial plan can definitely help you enjoy holiday time. If you need help with holiday budgeting or executing your plan, we are here for you–drop us a line or schedule a free call to learn more.