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The holidays are upon us, and it tends to be a time that a lot of people rack up debt to buy gifts. I’VE BEEN THERE. Not having any money saved to buy gifts, so I would swipe a credit card. That was until I learned that planning for holiday spending does not have to be stressful. With proper planning you can be well prepared for all of your holiday expenses.
Today, I will help you to prepare for your upcoming holiday spending! I will give you practical tips and tools to save money for holiday gifts, meals, and activities! I have also included a free $1,000 Holiday Savings Challenge at the bottom of this post to help you start savings today!
To get your $1,000 Holiday Savings Challenge, click the link below to begin the download!
$1,000 Holiday Savings ChallengeDetermine Your Savings Goal Amount
It all starts with creating a budget. Until you know how much everything will cost, you will not know how much you need to save. This is where a holiday budget comes in. YOUR BUDGET WILL DETERMINE YOUR SAVINGS GOAL. In the last post, I explained how to create a holiday budget. To learn how to budget for the holidays click here.
It’s a simple process of making a list of all your holiday expenses and the costs of each expense. This includes gifts, events, activities, meals, decorations, travel, accommodations, and any other holiday plans that cost money.
You can break your holidays savings goals into categories such as: gifts, events, décor, and etc. Or you can lump it into one savings goal such has Holiday Savings. I have one holiday savings because I don’t travel for the holidays. I only budget for gifts and activities. Your situation may be different, so make sure that all your expenses are included.
Decide Your Savings’ Goal Date
Now that you have created your savings goal amount, it’s time to decide your savings’ goal date. This is the date that you want to have your savings goal completed. The time between now and your savings goal date is your savings time period. You will have this time period to add money to your holiday savings. If there is a certain time that you plan to start shopping, then your savings goal date should be around this date. I like to start holiday shopping in November, but you may prefer earlier or later than this. Your goal date is based on your needs.
Create a Savings’ Plan
A savings plan is the amount that you will contribute each pay period or pay frequency. If you are beginning your holiday savings budget a year or six months in advance, then you have time contribute to your holiday savings in smaller amount. If you are beginning your holidays savings plan four weeks to 12 weeks out, then you will have to save larger amounts due to the short savings period.
For example, I plan to spend $1,000 on holidays gifts and events. If I start to save a year in advance and decide that my savings goal date is November 1st, below is what my savings plan will look.
Savings Goal Amount: $1,000
Savings Goal Date: November 1, 2023
Pay frequency: Biweekly (26 paychecks in a year)
Savings Plan = $1,000 / 26 paychecks = $38.50 added to savings per paycheck
( I rounded up to get $38.50.)
This means that my savings plan will be for me to add $38.50 per paycheck to reach my savings goal of $1,000. You will have to adjust your calculations based on your goal amount, goal date, and pay frequency.
Choose a Saving Method
At this point you may be wondering how you track your savings progress. And where do you put your money. There are many different savings methods, but to simplify things I will discuss three. Sinking funds, savings challenges, and an auto savings plan.
Sinking Funds
If you are a cash budgeter, then you may be familiar with a sinking fund. A sinking fund is a method used to save money over time to reach a savings goal. Commonly sinking funds consists of a cash envelope or savings account for the specific savings category. In this case, you would create a holiday sinking fund and add the savings plan amount to that fund each pay period.
A sinking fund is a great way to physically see your goal progress! I use sinking funds frequently and there is no greater feeling than counting the cash after I have reached my savings goal!
Savings Challenges
If you are familiar with my Etsy shop, then you may know that I love to create and participate in savings challenges. It’s a step up from a sinking fund because you are able to be interactive in your savings’ progress.
There are plenty of holiday savings challenges that take the guess work out of creating a savings plan. The goal amount, and savings plan are already on the savings challenge. Your only job is to save and check off an amount each time you save!
You can keep your savings challenge in a cash envelope or a savings account. There is something about a challenge that makes you want to save more!
Auto Savings Plan
If you don’t want to deal with calculations, cash, or paper, then an auto savings plan will be just what you need! This is the easiest savings method because money is added automatically to your holiday savings account.
There will be some work initially in setting up the holiday savings account and deciding how much money you want deducted each pay period. After that, you just sit back and wait for your savings goal to be reached.
This is the method that I used when I first begin budgeting because I did not have the discipline to save money on my own. I was able to have my credit union create a holiday savings plan for me. After my goal was reached, my holiday savings was deposited into my checking account. It’s took the stress out of scraping up money to buy gifts.
Free $1,000 Holiday Savings Challenge
To get your Free $1,000 Holiday Savings Challenge, Click the link below to begin the Download:
$1,000 Holiday Savings ChallengePlease feel free to check out the free budgeting resource library that has all a bunch of budgeting trackers to help you transform your finances: Free Budgeting Resource Library.
It’s Time to Start Saving!
I have walked you through the process of creating a savings goal, time frame, savings plan, and savings method. You should be fully prepared to save for the holidays. ANY HOLIDAY. This can be used to save for any future expense, holiday, or savings goal.
It takes a little effort to set it up, but the payoff will be worth it. Imagine paying for all of your holiday gifts, activities, travel, accommodations, or decorations without going into debt. That’s an amazing feeling. Remember that it is not too late to get started. Add what you can to your holiday savings and keep going!
Before you start creating your holiday savings plan, please leave me a comment below letting me know what method you will use to save for the holidays. Don’t forget to connect with me on social media: @thesavingbutterfly
