DJC#029 – Yule Be Ready: Dad’s Year-Long Blueprint for Holiday Savings

January has come and gone. As February introduces itself to us this year, it feels as if I’m finally getting my life and year on track. With the holidays, winter break for our son and a work project in full-swing, January has been a little rough. But now I have made some time to look ahead to this year and plan accordingly. Whether it’s planning a spring break trip, dealing with home repairs…barf, or making sure our savings rate is on par, it’s time to get focused. And you need to do the same if you already have not.

Financial Reflection

If you haven’t already done this, do it asap. Review your finances from last year and look ahead to this year to forecast the best you can. What events are you planning to gof to? What activities will your kid(s) be doing? Will you be traveling? How much will we spend on holiday gifts this year? Wait what? Why would I be worried about the holidays in February?

The whole idea here is to plan ahead as best as you can. Sure there are going to be surprises like a dishwasher leaking and causing some damage (this just happened to my friend), but there are a lot of things you can financially plan for. We celebrate Christmas, so one thing I started planning for a couple years back was a Christmas gift budget, and it’s really helped out once Black Friday arrives.

Holiday Gift Budgeting

How much did you spend on holiday gifts last year? The year before? Do you have any idea? That’s usually the first step in the road to holiday overspending recovery. I mean you don’t know what you don’t know, right?

Look back over the past two to three years to figure out approximately how much you spent on holiday gifts, and use this figure as your baseline. Now ask yourself, Did we overspend? Did we have to use our credit card to pay for gifts? And I’m not talking about the buying it with your credit card to get the points and paying off your statement balance kind of thing.

Once you’ve thought this through and arrived at an amount you can afford, divide by 12. This is the amount you are committing to saving each month towards the holidays. And if you’re planning to buy some new holiday decorations, I’d probably include that as well.

Dedicated Holidays Savings Account

You read that right. Open a dedicated high-yield savings account with a bank that’s giving you a great rate. Set up monthly automatic deposits into this account in the amount you decided. By the end December, you’ll magically have your Christmas budget! If you want to take it one step further, break down your monthly savings into 11 months the first year and then run this process from December from to December the years after. This way you’ve saved up before Black Friday even hits.

The best part about following this process is that you’ll be earning a few extra bucks in interest over the course the year. That’s good for a couple little stalking stuffers!

Once you’ve set this up, it runs automatically and there’s nothing left for you to do until it’s time to spend the money. Planning ahead and saving for things you know you’re going to spend on is one of the tricks to being more financially sound and less financially stressed. The holidays can be stressful enough…let’s take the stress out of this part at least.

Until next time, keep taking those steps to becoming more financially fit.