I swear that every year I see ads for the holiday shopping season show up earlier and earlier. Pretty soon we’ll be thinking about what to buy for holiday gifts right after July 4th! Well, once again the holidays are right around the corner with Thanksgiving coming up soon. While I love this time of year and the opportunities it gives me to spend time with friends and family, it can really be a drain on my bank account after it’s all over. Is it worth it? My answer is absolutely and I’m happy to spend money on gifts and travel to make the most out of this special time of year. However, I’m not going to break the bank this year as I’ve rounded up my top tips on how to save money going into the holidays so I start next year fresh with my savings still intact.
1. Sit Down and Set a Budget
I know, you probably already have a budget and you if you’re reading this you already look for tips on how to save money. Take a minute now and sit down to think about a budget just for this holiday season. Make a list of all the different things you will be spending money on. As an example, here is my short list:
1. Travel to Thanksgiving
2. Travel for Christmas and New Years
3. Gifts for each of my immediate family, and smaller gifts for extended family
4. Food for our office holiday party
5. New clothes (I need to look sharp on my trips)
6. Gift wrapping and shipping
As you can see, if you break down each category of what you anticipate your spending will be you can accurately set a budget for how much you will spend in total and how much you’ll spend on each holiday category. Don’t fall into the trap of setting a budget too high, being realistic is important at this stage. Look at your regular monthly budget and then set a price so you are spending within your means.
2. Think About What You REALLY Need to Spend Money On
But I already set a budget like you told me to, you might be thinking. Well, now is your chance to make sure you don’t overspend. It’s very easy to convince yourself tos pend more than you can afford because you’re spending this money to make your friends and family happy. Think hard about who you’re buying gifts for and how much you are expected to spend on them. Sometimes it’s okay to just send a card instead of a gift, or maybe a smaller gift than you typically would send. Really, it is the thought that counts after all. Take stock of how many holiday parties you’ll be going to and find out if you are expected to bring anything, and if so what you will bring. Think about your coworkers and whether you’ll be getting gifts from them. If they’re giving you something you should return a gift but maybe think about doing baked goods or smaller gifts like gift cards for coffee. Finally, if you have kids find out very early about what it is they’re looking to get for their holiday presents. They’re probably thinking about it way before you are so get an expectation of what you’ll be buying and what you think is too expensive so you can build a budget for their presents that will make both of you happy.
3. After You Budget, SAVE
This step is pretty self explanatory, but you need to start saving early for your holiday season. Personally, I start saving January 1st for the next holiday season by setting up an automatic deposit from my checking account into a separate holiday savings account each week. By socking away $5-$10 a week you can quickly build up a nice pool of money that can you can use to pay for all of your holiday expenses without dipping into your emergency fund or going into debt on your credit cards. If this is your first year setting a budget for the holiday season you can use this budget as a guide for roughly how much you’ll need next year as well. Whatever that amount is, set your weekly savings amount and let it go on autopilot until the holidays roll around again next year.
4. Get Rewarded for Your Purchases
If you tend to do a lot of your shopping at the same stores, then make sure to sign up for their reward programs. Just by shopping you can get a percentage of your total purchase back, qualify for extra discounts, and even get free stuff! You can also consider using what I call the gift card strategy. When shopping at your typical store buy a refillable gift card and each time you go to the store add a few dollars to that gift card. By adding $10 or $20 here and there you can quickly build up a pool of cash that you can use for your holiday purchases. It’s a modified version of the automatic savings account I described above.
5. Get Rewards Credit Cards
I’ve been saying over and over not to go into debt for your holiday purchases, but if you use a credit card responsibly and plan ahead you can take advantage of generous sign up bonuses on a new credit card and get points for your purchases. This year I knew I was going to travel from North Carolina to Seattle, Washington for a holiday get together with friends and family so I started looking for credit cards with generous sign up bonuses. I found a new card that waived the annual fee for the first year and gave me enough airline miles to fly to Washington for free! Similarly, I signed up for some amazing store branded credit cards for the stores I typically shop at and scored significant discounts on my larger holiday gift purchases. Since I was saving all year for my holiday purchases I knew I had the money to pay my card balance in full so I was getting points and savings all while just using up my holiday budget. Just be careful not to overspend and blow your budget because credit card interest is extremely high and is tough to get out of.
6. Take A Last Minute Financial Break
Let’s say you’ve saved all year, you’ve set your budget and you’re still going to come up a bit short of what you think you’ll need to cover your holiday expenses. What do you do now? Well, one option is to set yourself on a financial break. Choose an amount of time, at least a week, and don’t spend anything. It’s quite difficult, but if you plan ahead you can make it happen by not purchasing anything unnecessary, cooking your food for the week at home with what you have in your pantry, find entertainment for yourself at home and just save that extra money. You can quickly stash a hundred or even a few hundred dollars by going on a financial break and use that money to top off your holiday budget and make the most of your holiday season.