No Holiday Savings? This is How to Face and Prepare for the Next Year
When it comes to planning for the holiday savings, timing is everything. Without going into debt, the longer you have to build up cash savings, prepare your budget and purchase gifts at the correct price, the better you can meet these seasonal expenses.
According to a GoldJam survey of more than 2,000 adults conducted by The Harris Poll, avoiding debt during the holidays will save you from a spending hangover in the new year: on average, shoppers who expect to use credit cards to finance the holidays in 2020 predicted that it would take them a little more than three months to pay off their debt.
For grand savings schemes this year, starting a few weeks before the peak holiday season could cut it a little closer. And it adds tension to uncertainty regarding economic conditions. But you’ve got choices.
Here’s how this year you will schedule your expenses and start planning for the holidays next year.
Set your strategy for this year holiday savings
Say you are planning to seriously kick off shopping during Black Friday, which this year falls on Nov. 27. You’ve still got a bit of time to save and prepare. Begin with these steps:
Set your budget for the holidays
If you don’t have a lot of money, you would possibly have to use your discretionary revenue to fund your vacations, which is left over after daily expenses. Get a strong idea of how much it is, bearing in mind that you not only have presents to cover, but also holiday meals.
Being mindful of what you can afford, says Los Angeles-based financial coach Dominique ‘Reese, can prevent you from overspending.
“Think of your future self, I say,” says Reese. How would you feel about the expenditures you made over the holidays, your future financial self in January, February, March? ”
Now is a perfect time to create a budget that covers all your expenses, if you don’t already have one. It needn’t be elaborate. Only get enough data to help you reach 2021, which is a holiday gift to yourself, less distracted by your finances.
Build a gift list that suits your budget, and to avoid falling into debt, consider reducing holiday spending across the board. If your money is tight, ask whether less people will buy it for you. Chances are that friends and family would be open to suggestions to make this year’s holidays less costly.
Look for good offers next. Black Friday and Cyber Monday might bring big discounts, but at other times, you could find better offers. Start testing rates now so that you understand what’s a decent deal and what to miss.
Being frugal with holiday meal shopping will go far, says Summer Red, the Association for Financial Counseling & Planning Education’s professional development manager.
“Food is central to most holiday celebrations, and people will buy a lot of food even if people don’t like it,” Red says. For instance, if no one in your family likes a turkey’s dark meat, consider having specific cuts rather than an entire bird.
I encourage individuals to let go of certain traditions and concentrate on what they really enjoy, she says. That means there’s also less waste of food and less waste of money.
Set yourself up for next year holiday savings
Start dreaming about how you’ll save money next year when preparing this year’s holidays.
Track your expenses to help tell you what you’re going to need, advises Reese. “If you have gone beyond your budget, set aside more for next year,” she says.
Then, find a plan for holiday savings that works for you. A few options are listed here:
- The 52-week holiday savings challenge: With this “challenge,” one of Red’s favorite strategies, you start by saving $1 the first week of December, then $2 the next week, $3 the following week, and so on, adding one dollar a year per week. In the end, you’re going to have about $1,400 to spend on the holidays.
- Holiday savings accounts: These savings accounts are usually locked, often offered by credit unions, meaning you can’t access what you put into savings until the holiday season. Putting just $25 a month into one of these earns you $300 saved after a year for the holidays.
- Set aside part of your income: to develop the habit of holiday savings, Reese recommends automating transfers. Getting part of your paycheck deposited directly by your employer into a savings account is an easy way to set aside money without worrying about it, too.