How to start saving money for Christmas

Somehow each year Christmas seems to creep up and ruin my budget. I know it’s coming. The leaves are changing colors, the temperatures are dropping. I’ve seen Christmas décor in local stores since September (in fact it might have even been August!).

Yet, suddenly, it’s black Friday and I’m whipping out my credit card to pay for gifts for everyone on my list, hoping I have enough money to cover it all.

According to a study by the National Retail Federation in 2018, consumers say they will spend over $1,000 during the holiday season.

The study indicated consumers spend in 3 main categories:

$637.67 – Gifts
$215.04 – Non-gift holiday items like food, decorations, and holiday cards
$154.53 – Non-gift purchases that they take advantage of throughout the holiday season via promotions and deals

Whatever you intend to spend this year, having money ready to spend will make the entire holiday season a lot less stressful and much more enjoyable. Think of going into the new year and having paid for all your holiday expenses in cash. No extra credit card bills to pay off in January. Just a clean slate ready for the new year!

Even those who are minimalist with the holiday season are likely to spend something. To be prepared with money in -hand for the holidays, you’ll need a plan to get there.

Table of Contents

Below, check out 11 easy ways you can save money for Christmas.

These tips are to help you save the money you plan to spend on holiday gifts. Finding the best deals for those on your list is up to you! But you can save. If you haven’t started saving yet, don’t fret. There is still some time!

First, you need to create a holiday budget

Before we get into how to save, you’ll need to know what to save. Maybe you’ve been saving since January and have a decent amount ready for the holidays already. If you do, that’s awesome! If you don’t, don’t panic!

First, create a budget. If you don’t have a sense of how much you are going to need, how will you know when you’ve saved enough? And start early! It’s a lot easier to save money for the holidays for over 11 months than it is over 1 or 2 months.

Tips to create a Christmas budget:

Make a list of every person and everything you think you’ll be spending on. That’s immediate family, extended family, colleagues, teachers, pets, etc. Whoever you plan to gift something to. Also don’t forget items like secret Santa exchanges, donations (think Toys for Tots), meals and other holiday festivities. Any décor items. Put everything and everyone as a line item.
Then assign each person/item a dollar value. Make it as realistic as possible.
Add up all the values to get the total amount you plan to spend this holiday season.
Divide the total by how many weeks you have left before the holidays. Or months, or pay periods, etc. whatever timeframe makes the most sense for you. That is how much you’d have to save between now and the holidays.

Let’s say for example your total from the above exercise is $625 and you’re paid bi-weekly. You have 7 paychecks left between now and Christmas. $625/7 = $89.29 per paycheck you’d need to save to meet your goal.

Not sure how you’re going to make your goal? Check out the tips below to help you save money for Christmas. Don’t blow your budget. Have a plan and stick to it with these easy tips.

How can I save money for Christmas?

1. Set up a sinking fund to cover holiday expenses

Automatically withdraw cash from your check each pay period, and have it deposited into a high yield savings account. Consider an account with Ally or Marcus which currently has rates around 2%. That’s a pretty good rate! Not sure how where to start? Check out why you need to have sinking funds in your budget!

2. Save up points from credit card rewards

Are you a regular plastic user? Who isn’t! As you’re racking up rewards points throughout the year, don’t cash them out. Roll them for the entire year and use the rewards to pay for holiday purchases.

Also, check if there are any additional incentives for your credit card rewards. For example, I use Chase and my credit card offers me the option to cash in points for discounted gift cards. So, for example, I could get a $50 Macy’s gift card for only $45 in points. Don’t assume that cash is the only or best option. Check around before you cash out.

3. Use an app like Acorns to automatically invest

Micro-investing apps like Acorns are an easy way to save without even realizing it. You can choose to invest a specific amount of money at a regular interval. For example, you want to invest $50 on the 1^st of every month.

Another option with Acorns is to round up your change and invest the difference. An example is using a credit or debit card to charge $26.16. Acorns would “round up” the purchase to $27, and invest the difference, in this case, $.84. So, it’s pennies here and there but they add up over time. Saving money for the holidays can be so easy using an app like this.

4. Save your annual bonus

Put money aside when you receive a bonus to pay for holiday expenses. If you have done your holiday budget, you already know approximately how much you will need. While you receive this bonus money, why not put some away to pay for expenses you know are coming later in the year?

5. Put Christmas money in a CD

If you have the money you want to spend now, for next year, lock it up! Check out the rates on an annual CD and invest the money for 12 months. You won’t be able to spend it elsewhere, and you’ll earn a decent interest rate on it as well!

This is a great option for impulse buyers or people who like to spend all the money they have in their accounts IF it’s in a CD you literally cannot touch it without a penalty, and you’ll earn some interest along the way.

6. Check with your bank or credit union on holiday options they already have in place

Many financial institutions and banks offer holiday accounts that earn decent interest. They may be called holiday funds or Christmas Clubs. The account is structured specifically for holiday spending. You deposit regularly throughout the year, earn decent interest, and withdraw at the end of the year to cover expenses.

Some accounts may even have a stipulation that you can’t withdraw the funds until a specific date, for example, until November 1^st. This option great for impulse buyers or those that don’t trust themselves!

7. Pay with cash and put the change in a holiday savings jar

Not only will paying with cash keep you on budget, but you can easily save the change you receive. Simply put coins into a piggy bank or jar. Heck, encourage the entire family to do it! At the end of the year cash in the money and use that to put toward the holidays. Or, even better, challenge yourself to keep your entire holiday spending to whatever you cashed in.

8. Aim to save a specific dollar bill

If you primarily pay with cash, for example, put all $5.00 you receive in your normal course of spending away to help save. So, every time you pay with cash and receive a $5.00 bill, hide it away. Just one $5.00 bill per week is $250 for the year! Imagine yourself in mid-November about to start your holiday shopping with a stack of $5.00 bills that will practically cover anyone on your list!

9. Roll your Swagbucks or Ebates earnings

There are so many money-saving apps out there. Swagbucks and Rakuten (formerly Ebates) are two of the big ones. But also think apps like Ibotta that you may use for groceries. Roll the savings you receive throughout the year and aim to cash them in at the end of the year.

10. Don’t claim health or child benefits throughout the year

If you have an HSA or FSA card that you use for medical expenses, don’t use it. Pay for expenses as you can out of your own pocket. Keep receipts and claim reimbursements toward the end of the year. This takes some coordination so it may not be for everyone.

But if you’re able to pay that $25.00 copay in February out of your pocket at the time, then file for the reimbursement in October or November. Use that money toward your holiday expenses.

11. Buy one gift card each month

Perhaps it’s to a store you know you frequent like Target or Kohl’s. Maybe it’s a Visa gift card. Whatever it is, the purpose is to spend money you have now and lock it into a gift card that you will spend on holiday expenses.

Pro Tip: Use GiftCardGranny.com to buy gift cards. You can purchase discounted physical gift cards or e-gift cards and are a great way to stretch your money even further!

Conclusion

You should now have a few new ideas you can use to start saving money for the holidays. If you have a plan and stick to it, you can come out of the holidays debt-free (and stress-free) knowing all gifts were paid for in cash. Now that you have the cash, check out ways you can trim holiday spending and keep more of that cash in your pocket!

What is your best tip to save money throughout the year for Christmas/holidays?

Steph