Holiday shopping season is right around the corner. Already feeling stressed about those upcoming expenses? You can alleviate some of those money woes by putting together a savings plan now. Projecting your holiday expenses can make it easier to manage your finances in the middle of shopping season — and may even prevent a holiday debt hangover.
Use these tips to get a head start on saving for the holidays.
1. Set up a separate savings account. It’s easier to reach your savings goals when you can monitor your savings contributions closely. Set up a secondary savings account at the bank, or find out if your online banking privileges allow you to set up a sub-savings account where you can create a separate category specifically for holiday purchases. Creating a separate account that allows you to automate savings contributions can also make it easier to meet a savings target.
2. Review last year’s expenditures. Page through last year’s financial documents to determine how much you spent on holiday-related purchases. This can give you a ballpark estimate on costs for the upcoming year, so you can set some realistic savings goals. Divide that number by the number of weeks left until the holidays to set weekly savings goals and review your progress along the way.
3. Make your gift list now with prices. Don’t wait until the few weeks before the holiday season to make your shopping list. Start putting together the gift list now, and include a list of all decorations and other holiday-related items you want to buy this year. Add prices to the list by looking up current prices at your favorite big-box retailer for reference. This can give you a fairly accurate idea of how much the holidays are going to cost you, and you can start paring down the list if the final total is too far out of your budget range.
4. Put a hold on extra spending through the rest of the year. Take a closer look at your monthly budget, and see if you can allocate funds from entertainment or luxury expenses directly toward your holiday savings plan. If you can cut out some of those costs on entertainment, dining out and other extras for just a couple weeks or months, you may be able to save a few hundred dollars just in time for the holidays.
5. Set a weekly, not monthly, goal. Since you may only have a few weeks until you start making those holiday shopping rounds, set a weekly goal instead of a monthly goal. Setting weekly savings targets can make it much easier to reach your goals and keep track of your successes along the way. It can be very motivating to see your savings plan grow week by week, and you can use smartphone budgeting apps to make the process easier.
6. Change your mindset. As you start cutting out those extra purchases to make more contributions to your savings plan for the holidays, change the way you think about the sacrifices you are making so that you don’t feel deprived. Recognize and appreciate the fact that you are working toward a bigger goal by delaying short-term gratification. Keep that list of holiday purchases in a visible place so you know what you are working toward, and consider how great it will feel to take care of those holiday expenses without going into debt this year.
7. Take advantage of bonuses and freebies. Reach your saving goals faster by putting that holiday bonus and other freebies you earn from shopping rewards programs toward your savings account. Resist the temptation to splurge when you do have extra money coming in so that you can maximize those dollars this year. Make a conscious effort to contribute as much as possible to your holiday savings account. If you do end up having more than you needed after making your holiday shopping rounds, make the most of your bonus by shopping the post- holiday sales.
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How to Start a Savings Plan for the Holidays originally appeared on usnews.com
