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Effective personal finance is all about being prepared right?
We need to be prepared for a layoff, prepared for a major home expense that pops up out of nowhere. If I bail while snowboarding (trying to keep up with friends who are way better than me), I need to be prepared if I’m off work for a month healing.
I’ll be the first to admit that I’m not the best at this. Planning has never come naturally to me. When our dishwasher blew up and ruined our kitchen a couple of years ago, I definitely was not prepared. The insurance company covered some of the damages but we were still left with a hefty bill.
But Christmas? That happens every year, so there’s really no excuse for not being prepared! A Christmas savings plan is the solution.
When should you start saving for Christmas?
The best time to start saving for Christmas is December 26th. That gives you a full year to sock money away and doesn’t strain your wallet so much near the end of the year. The second best time is now.
Christmas happens every single year and still many of us behave like we’ve never heard of it. Every year parents max out their credit cards to buy their kids the latest toys and trends, (sometimes I wonder if it’s more for the parents than the kids) and it comes with a cost.
This is not accounting for parents, siblings, aunts, uncles, extended family, turkey dinner, decorations blah blah blah. It’s easy to see how Christmas credit card spending gets out of control. Many people spend a good chunk of the following year paying back Christmas debt and accumulated interest.
You might be thinking: ‘that’s great Mike…why are we talking about Christmas in September?’
Simple – if you haven’t already, you should start saving for the holidays now. I would encourage you to find a quiet spot (if you have several kids like me, that might be on your roof or at the library) and write out your projected expenses for Christmas.
Here are some expenses to consider:
- Gifts for your children
- Gifts for your spouse
- Gifts for extended family and friends
- Costs associated with fancy dinners and hosting
- Are you off work over Christmas? If you’re not on salary budget that lost time in
Write down how much you think you’re likely to spend on each of these things. Add all of the numbers up and add 25% as a buffer.
Now you have a real tangible cost for all of your Christmas expenses. A little scary right? Don’t worry, I’m going to show you how to save for a debt-free Christmas
5 Ways To Save For A Debt-Free Christmas
The Old-School Budget
You have a rough estimate of how much Christmas is going to cost. Next, figure out how many pay periods you have remaining until Christmas. Divide your expenses by the number of pay periods remaining and you now know how much to put aside from each check to cover the costs.
If you don’t think that you can do this on your own, try setting up a weekly or bi-weekly auto transfer to a savings account where you stash your Christmas money. It’s just like above, but requires less self-control!
Buy Gifts Early!
I always roll my eyes when somebody tells me that they’re done Christmas shopping in October. Why not though? Buying gifts throughout the year is great for a few reasons:
- You can take advantage of more sales
- It spreads out your costs over a longer period of time
- You may have better access to seasonal gifts than you would in December
- You avoid the insanity of December shopping!
Ask your employer for help
If you really have trouble saving, why not ask your employer for a hand? Your employer may be willing to set aside a portion of your paycheck each month to be paid in December and offset the expenses of Christmas.
Can’t afford it? You’ll need to cut from somewhere! Here are some ideas to reduce your costs.
- Consider getting just one great gift for each child rather than several.
- Nobody is going to judge you if you host a potluck instead of buying everything yourself. Life is expensive, people get it.
- See if you can pick up some extra hours at work in the months prior.
- Sell something that you don’t use and put it toward Christmas. I recently made over $100USD on EBay for an old wrench set that I never used anyways.
Get yourself a side hustle!
It may be too late in the game now for you to put enough money aside to cover Christmas. Don’t worry, you’ve got options. Find yourself an extra job or another side hustle to help make some extra cash between now and December. Here’s an article I wrote that may help to get you inspired
If you take the time to plan now, you won’t risk being one of those folks who is still dealing with Christmas 2017 on their credit card at this time next year.
Planning is the key to success when it comes to finances. If you’re going to bother with an emergency fund, preparing for things that may or may not happen, why not prepare for the things that are definitely going to happen?
Question for you:
Do you use a Christmas savings plan, or just wing it?