It might seem early, but now is the best time to start saving for the holidays. Today we have a guest post from Nicole of Struggle Today Strength Tomorrow. She’s going to show us how to save for a holiday on a budget.
HOW TO SAVE FOR A HOLIDAY ON A BUDGET
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Every year, we experience the same thing. The last 4 months of the calendar year. This time of year puts a lot of families in debt.
The number of people using credit cards to pay for these events is increasing at a staggering rate. But if you know how to save for a holiday on a budget, you can prevent a lot of these financial struggles.
The last four months of a calendar year typically include:
- Back to school
- followed by back to school shopping, school photo packages, homecoming, fundraisers, field trips, school meals, baby sitters or daycare, and sports
- Black Friday
- Cyber Monday
- New Years Day
While these days are normally “set in stone” and don’t flop around the calendar like Easter, families are still going in debt trying to accommodate these dates.
With proper planning in advance, these days could easily be paid for with cash and not cause any financial burdens.
START SAVING FOR THE HOLIDAYS NOW
With these holidays happening every year around the same time, it makes budgeting for them much easier.
Unlike emergencies or surprises, these things are relatively the same routine every year.
If you keep them in mind during the other portion of the year you can be two steps ahead by the time that they get here.
One of the best ways to do this is by setting up a sinking fund for these holiday purposes.
Here is how to save for a holiday on a budget:
- Assess your current financial situation
- Set a holiday budget
- Set a goal and deadline
- Start saving money
- Make additional income
- Use your savings wisely
- Enjoy your holidays worry free!
ASSESS YOUR CURRENT FINANCIAL SITUATION
Most budgeting advice starts with “make a budget” but that isn’t actually the first step.
The first step to crafting a great budget is to assess your current situation. It’s like a pre-budget budget.
You write out where your money is going and coming from at this exact moment in time.
If you want to cut some expenses out, go right ahead.
But having this visual tool can help you to make a better holiday budget in step 2.
MAKE A HOLIDAY BUDGET
Unlike an ordinary household budget, this is a holiday-specific budget.
Pick a holiday of choice.
In this example, we will use Christmas because it can be considered the most expensive holiday of the year.
Things to consider when making your Christmas budget:
- How many people are you buying gifts for?
- Are you partaking in any traditions such as cookie exchanges, secret Santa, or zoo lights?
- Do you have kids to buy for? -If so, how many gifts for each kid (include the ones in the stocking and from St. Nick)
- What will be for dinner?
- What other things do you do during Christmas that could cost any amount of money?
While finding free Christmas activities for families is incredibly easy, a lot of activities can cost some money. Even just a $5 admission somewhere can add up quickly when you have several people attending.
SET A GOAL WITH A DEADLINE
Using the information gathered, write out your estimated costs for this holiday. How much is it?
Do you believe in your frugal shopping abilities enough to trim these expenses down and lower your costs? If you do, that’s great. What is your goal budgeted amount?
Round up to the nearest whole number and set that as your target amount.
Now, what is your deadline?
While you obviously need to have the money before the holiday, so that you can pay for the it, you should set a specific date as your deadline.
If you set it too close to the holiday then you could risk missing out on activities or rushing to do last-minute shopping.
I personally recommend setting your deadline at no less than 3 weeks prior to the holiday you’re saving for.
So if you are saving money for Christmas, having the money in a savings account by December 1st can work out great because you have the entire month to shop, plan and prepare.
If you do your shopping on Black Friday or Cyber Monday, you’ll want the money (or at least a majority of it) by then for your larger purchase items.
You have a goal and you have a deadline. This is good!
Now the next step is to figure out how much you need to set aside per paycheck or week.
It doesn’t matter how often you get paid, but figure out how many pay dates there are between now and your deadline.
Divide your goal by that number and that’s how much you need to have saved every payday.
Can you reach your goal with your current income or do you need to find ways to save additional money?
Simple ways to save money every month:
- Cut down your cable package (or remove it)
- Contact your phone provider and ask about discounts or packages to reduce your rate
- Use less electricity to help you save money on your utility bill
- Meal plan with foods that are on sale or in season
- Don’t shop impulsively
- Pack your own lunches for work
- Find frugal or low-cost activities to keep you away from boredom and expensive hobbies
- Partaking in a no-spend challenge or even a pantry challenge can save you a few hundred dollars in a single month if you’re up for it.
While saving money is a great idea, it doesn’t hurt to try to make extra money to help reach your goals faster.
MAKE MORE MONEY
The fastest way to help you reach your financial goals is to increase your income (without increasing your expenses). To do this, side hustles can be a great idea!
A few easy side hustle jobs that you can do include:
- Selling things online or hosting yardsales
- Using money-back rebate apps or websites like Ebates and Topcashback
- Sign up for Paribus so you can have them working in the background to save you money on your online purchases (they also help for some credit card purchases too!)
- Dog walking or watching
- VIPKid (if you have a bachelors degree)
- Freelance writing
- Yard work such as mowing lawns, watering plants or grass, picking up dog piles, and raking leaves
There are no rules to your budgeting goals, just small promises that you make to yourself. If you happen to save up more than enough money before your deadline is even reached, you can sit back and enjoy your holidays without gathering any debt.
Tip: You can use this same money-saving process for any holiday, birthday, or event like back to school.
AFTER YOU REACH YOUR GOAL
Alright, so you’ve filled your holiday savings fund or jar with your goal amount and in plenty of time before the holidays. Congratulations! This was the first few steps to a debt-free holiday.
You went through all of this work of saving money and making additional monies to pay for this event and now you get to stop. But not really. Now it’s time to shop smart and spend that money wisely so that you can get the most out of it.
USE YOUR HOLIDAY SAVINGS WISELY
Reflect back on your original papers- the ones that helped you make this holiday budget in the first place. Notice what expenses you created this budget around and look for the best deals for all of them.
By shopping smart and looking for deals you can save even more money.
The more money that you save with your holiday fund, the better. This means you have more money to toss towards another gift or experience that you didn’t originally plan for.
LIMIT GIFTS OR EXPENSES
Being minimal doesn’t mean going without. It just means being selective with your choices and choosing something that isn’t frivolous or that will break (or disappear) within a few hours.
This would include gag gifts or those boxes of shelf-stable cheese and crackers.
Some families limit their child’s gifts to the rule of 4.
- Something to wear
- Something to read
- Something they want
- Something they need
Then they add in the gifts from that other jolly guy, stocking stuffers and maybe a group gift. The wow factor is just the same when there are a few gifts under the tree as there is when the room is filled.
The benefit of having fewer gifts is that you can be sure that they will actually be used, played with and loved.
The exception is experiences. If you pay for a trip to the zoo or membership pass somewhere, these are minimal gifts that don’t last long but have a long-term affect. You can save a lot of money on things like this thanks to Groupon.
SAVE FOR A HOLIDAY ON A BUDGET
Having a great Christmas or holiday doesn’t have to cost much. There are a ton of different ways that you can save and prepare well in advance. When you can how to save for a holiday on a budget, you can enjoy your holidays worry-free and without gaining any new debt!
Nicole Durham is a personal finance blogger on her website Struggle Today Strength Tomorrow, where she teaches people to budget and save money. Her passion for saving money and stretching a dollar has her sharing a lot of great advice to help families overcome debt and financial hurdles.
Related Posts about Saving Money during the Holidays:
- Top 10 Frugal Holiday Hacks
- What should you do when you can’t afford the Holidays?
- 5 Ways to Save for the Holidays Right Now
- How to Actually Stay on Budget During the Holidays
Let us know in the comments below how you’re going to save for a holiday on a budget.