Budgeting For The Holidays Needs to Happen Early

Are you afraid your next credit card bill won’t fit in the mailbox?

Are you starting to regret all of those gifts that you charged knowing quite well that you weren’t going be able to pay them off?

These are questions that millions of people ask themselves each and every January. In fact, you might have been asking yourself those questions right before you started reading this.

You also may have asked yourself, “how did I let it get so out of control?” and figured “there’s got to be a better way to pay for the holidays“.

Well, you’d be right. There is a better way to pay for the next holiday season.

You need to start planning for it right now.

Yeah, like 12 months in advance. Here are some ways to make sure you have enough savings come December.

Start Budgeting For The Holidays Today

The easiest way to save for the next holiday season is to determine a savings goal and divide it by 12.

For example, let’s say that you want to budget $1,200, which includes gifts, travel, food, office parties, etc.

All you need to do is divide $1,200 by 12 and then save that amount each month. In this example you would need to set aside $100 each month to meet your goal by December. Be sure to add that as an expense in your annual budget.

Now, what should you do with that money each month? You might want to transfer it to a separate savings account and label it “Holiday Fund”.

If you’re worried about spending the money, send it to an online bank and make it harder to get to. Personally, I use Ally Bank.

When it’s time to spend, just transfer the money over to your checking account and use the cash. If you think you’ll have a hard time sticking with the budget you set for yourself, try some of these tips.

If saving something each month for 12 months seems like overkill, just do what works for you.

Personally, my wife and I start saving for the holidays about 3 months before December.

Since we live close to family and don’t spend much on gifts, we can easily save $600 during that time. When December rolls around, we just send the $600 over to our checking account and spend as usual. No bills for us in January!

Use Your “Extra” Paychecks

If you’re paid on a bi-weekly basis (26 paychecks per year), there are two months during the year in which you are paid 3 times.

Since you normally build your budget around two paychecks, the months in which you receive a third one, you should have some added flexibility. You can simply move that “third paycheck” directly to your savings account.

I have a co-worker who does this each year.

Typically, their first “third paycheck” month happens in the beginning of the year. She takes that money and moves it to a separate savings account for her family’s summer vacation.

When the second “third paycheck” month rolls around, she transfers that money to a separate savings account for her holiday shopping.

Vacation and the holiday season are paid for! Nice!

Now get out there and take care of your money, so it can take care of you later.

Your financial coach,