How to save for holiday expenses

From gifts and decorations to travel expenses and more, people often wonder about the best way to save for the holidays.

While the general tips are the same as saving up for any other large expense, there are several additional considerations you should keep in mind as we head into the holidays.

Note, however, that the single best thing you can do to help your finances going into the end of the year is to set up a plan to save both early and often.

Start saving early

No matter what you’re saving up for, it’s wise to start saving as early as possible to lessen the impact your plan will have on your finances.

Whether your holiday expenses are fairly predictable and don’t change much from year to year, or whether each holiday season comes with new gift-giving and spending surprises, your first and most important action when saving up for the holidays is to begin saving as early in the year as possible.

For example, if you save $90 a month from January until November, you’ll end up with close to $1,000 in your account to devote to holiday expenses.

Compare this to an alternative scenario where you need to save $500 in October and November to meet your savings goals—a plan that would have a much greater impact on your finances.

However, setting up a savings plan early in the year isn’t always realistic. But even something as simple as a piggy bank in your bedroom can make a huge difference when the holidays come around.

Remember, saving money is only effective if you can make a regular habit of it. No matter what strategy you choose to go with, the most important thing to keep in mind is that you need to set a schedule you can stick to for weeks or months at a time.

Open a savings account or earmark funds for your expenses

Before you begin to save money for the holidays, you should take a moment to think about where you’d like to keep the money until you use it.

One common strategy is to open a new savings account with the plan of only depositing money for the holidays into the account.

You could also choose to earmark funds in an existing savings or checking account, provided you have a system in place for keeping your holiday money separate from your other funds.

No matter which strategy you choose, make sure to keep your holiday savings totally separate from your other money. You don’t want to look at your account in December only to find that you accidentally spent your savings on something else in October.

Make a list (and check it twice)

Once you’ve earmarked a place to accumulate your holiday money, sit down and build out a budget that accounts for all your holiday expenses. This can help you determine a specific number for how much you should be saving.

Start by looking at how much you spent on the holidays last year, as well as how much you spent on each person. Then, use this information to figure out a price range for how much you want to spend on them this year.

Make sure to overestimate a little to account for tax, shipping and any other fees that may come up.

Once you have your list of people to buy gifts for, add up all the ranges to figure out how much you’ll need to save for presents this year.

If the number feels too high or too low, go back to your list and adjust until you’re happy with it.

Next, take another few minutes to think about any other holiday expenses you’ll have to pay for this year. A few examples may include:

• Travel — If you regularly travel for the holidays, you’ll want to factor gas or airfare into your budget. Make sure to account for any expenses relating to your trips, such as food or hotel costs.
• Entertaining and Decorations — If you choose to host a party or decorate your home for the holidays, you may want to start saving now for any costs relating to those activities. You may also want to account for any related expenses such as holiday cards or baked goods to ensure you cover all your bases.
• Other Holiday Expenses — Finally, it’s a good idea to save a little extra in case any unexpected expenses come up during the holidays. For example, if a gift doesn’t arrive on time you may have to buy something else for under the tree. Or, if more family members than normal show up at your door, you may have to buy more food than you originally planned.

Once you have your gift list and all other expenses in hand, add them together to figure out the total amount you should be saving for the holidays.

As with the gift list above, take the time to adjust your expenses to match your financial situation until you’re happy with the result.

Take advantage of sales and other deals

Another key factor to keep in mind when building your budget is that some items may have different prices going into the holidays as retailers begin offering a variety of holiday discounts.

Recent surveys have shown that close to 56% of U.S. consumers begin their holiday shopping before the end of October, and retailers are rushing to capitalize on this trend with discounts on gifts and other common holiday items.

Further, holiday sales like Black Friday, Small Business Saturday and Cyber Monday can all provide a great savings alternative for people who want to wait for the best deals in late November to begin their shopping.

Signing up for email newsletters, looking through magazines and watching your favorite retailer’s social media pages are also great ways to ensure you don’t miss a good sale.

Importantly, these sales can help you save money, leaving more funds in your budget for other expenses or any unexpected costs that may turn up during the holidays.

Remember that the holidays are about spending time with loved ones

The whole point of the holiday season is to spend time with loved ones and celebrate the end of one year and the beginning of another. It’s important to remember that money and expensive gifts aren’t the things that make this season special.

The tips outlined above can help make saving for the holidays a little easier, but you should also remember that true happiness can often be found in the priceless moments we spend with our loved ones.

Make homemade cards with your family. Bake cookies for your friends. Read stories to the children (or adults) in your life who need some more holiday magic.

At Associated Bank, we make it as easy as possible for you to save your money for the moments that matter.

As we approach the holiday season, consider starting your holiday saving journey with a quick call with one of our experienced banking professionals, or schedule an appointment at any of our Associated Bank locations to discuss the options and strategies available to help you save for the holidays.