They come around every year and yet, somehow, the holidays — and their added expenses — seem to sneak up on us every time. Whether you failed to set aside enough money in the first place or wound up going way over budget, you may be starting out the new year with some alarming credit card bills.
While you can’t pull a Christmas miracle and travel back in time to reverse the damage, you can make sure you don’t make the same mistake next year by prepping ahead of time. We know, the holidays just ended — but by starting early, you enable yourself to save smaller amounts of money at a time. That means you’ll hardly feel the pinch to your wallet and by the time you need the money next winter, your budget won’t be bent out of shape. Here are four savings strategies you can use throughout the year to build your holiday savings fund.
CREATE A SEPARATE SAVINGS ACCOUNT
It can be hard to save toward a faraway goal when you have things to buy right now. Setting up a separate savings account can help keep that money off-limits until you’re ready to use it for its intended purpose.
Look back on how much you spent this past holiday season to estimate how much you’ll likely spend next year. The total might seem scary, but since you have almost an entire year to save, you can divide that number by months, or even weeks, to see how much money you should set aside at a time. The more time you have to save, the smaller the number — and you likely won’t even notice setting aside that $20 per paycheck.
After you decide how much to save, the next step is determining where you’ll save it. Most banks will let you set up an additional savings account where you can funnel your holiday savings directly. But if you don’t trust yourself to leave that money alone, even if it’s in its own account, you may opt for an even more specialized account: a holiday club savings account.
Most commonly found at credit unions, you can elect to auto-deposit a certain amount of money to a holiday savings account, where it’ll earn interest until it’s deposited back into your checking account, typically around November. Some banks even have penalties for accessing your money early so that you’re less tempted to use it for non-holiday spending.
MAKE SAVINGS AUTOMATIC
The easiest way to save? Make it something you don't even have to think about. If you’ve already set up automatic transfers from your checking to savings account but want to do more, roundup apps like Digit or Qapital may be your answer.
Every time you make a purchase, they’ll round it up to the nearest dollar and deposit the difference in the savings account of your choice. So, if you spend $4.50 on a coffee, the app will round up the purchase to $5 and deposit 50 cents into a separate account. Let it work its magic throughout the year and you’ll find you have a nice gift fund waiting for you come the holidays. Just double check what fees you would have to pay, if any, to use the app of your choice.
EARMARK YOUR TAX RETURN OR ANNUAL BONUS
Maybe your budget is already stretched too thin and you would miss that extra $20 from each paycheck. If you can’t put anything away throughout the year, consider using a small windfall — like an annual bonus or tax refund — as your holiday savings. It can be tempting to spend it immediately on a sunny getaway or concert tickets, but setting it aside for the holidays means the pressure is off for the rest of the year.
Again, keeping it in a separate savings account (preferably a high-interest savings account) is best so you’ll be less tempted to use it until you’re finally ready to go shopping for presents or pay for those plane tickets to see the family.
PICK UP A SIDE HUSTLE
If your income is already earmarked for other things, picking up a side hustle or part-time job can bring in extra cash you can funnel straight to savings. And since time is on your side, you may find just a few hours a week can lead to significant progress.
If a scheduled part-time gig doesn’t sound like your jam, consider offering your services on Fiverr or TaskRabbit to pick up small jobs when it’s convenient for you. That way the only thing you’ll have to stress about next holiday season is finding the perfect gifts and fitting all the parties into your schedule. And what’s happier than that?