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Don’t you want to scream when you see Christmas displays in the stores before Halloween? Or when “It’s Beginning to Look a Lot Like Christmas” is stuck in your head for two months because it starts playing in early November?

The Christmas creep can be annoying, but there’s at least one good reason to start thinking about the holidays before the leaves start changing color: It gives you more time to save.

Given the current trajectory for holiday spending, you’re going to need that secret savings stash. The National Retail Federation found holiday spending rose 14.1% in 2021 with US consumers forking over a whopping $886 billion to spread a little holiday cheer.

Waiting until November or December to prepare for holiday expenses means you’ll often end up charging your purchases and paying them off — plus interest — well into the new year. Instead, establish a Christmas savings plan now to avoid debt and overspending.

Not sure how to squirrel away extra funds for the holidays? Here are six easy steps to get you started.

Step 1: Start With the End in Mind

To save enough money to cover all your holiday expenses, figure out how much you plan to spend and divide that by the number of weeks you have until it’s time to start shopping. That will tell you how much money you need to save per week to build up your Christmas fund. In the personal finance sphere, we call this setting up a sinking fund.

Step 2: Make a Gift List

To estimate your overall savings goal, first make a list that includes who you’ll be shopping for and how much you’ll spend on each person. It may be helpful to refer to what you spent last year. Or you could research the prices of items you plan to purchase for each person and total them up.

Step 3: Check it Twice

Heads up: Your Christmas savings plan needs to cover more than gifts. So add estimated costs for decorations, food and holiday events to your shopping list. Between special events where you contribute a bottle of wine, gifts for your kids’ friends or an office Secret Santa, plus the bounty of food on the actual holiday, these “extras” can really add up.

Step 4: Do the Math

Total everything and divide it by the amount of weeks left until you’ll hit the stores. Unless you’re a fan of last-minute shopping, this means giving yourself some wiggle room before December 25.

Statista indicates the average U.S. consumer spent about $886 dollars on Christmas gifts during the 2021 holiday season.

If your Christmas budget is $500, you’ll need to save $31.25 per week for 16 weeks. If you want to save $1250 to meet your Christmas savings plan goals, you’ve got to put aside $78.13 per week for 16 weeks.

Step 5: Consider Setting Limits

Another tactic for holiday saving is to determine how much money you’re able to save and create your holiday budget based on that. For example, if you’re only able to save $25 a week to go toward your Christmas savings, you’d save $300 in 12 weeks. That would be your limit for all your holiday spending.

If you think you’ll need more money to pay for all your Christmas expenses and still emerge debt free, you’ll need to start saving earlier so you have more weeks to save up. In fact, you can implement your Christmas saving plan anytime during the year.

Step 6: Keep Holiday Savings Separate

As you start saving for Christmas, it’s good to keep your holiday savings apart from the rest of your money so you don’t accidentally spend your stash on everyday expenses. Open a new savings account today to keep things organized.

If you take the cash envelope route, make sure you have an envelope exclusively dedicated to holiday expenses and not other short-term goals. Set weekly calendar reminders to nudge you to put the money aside.

A few extra savings tips:

Use Old Gift Cards.

It’s easy to forget about gift cards you’ve gotten long ago that still have a balance. Dig out your cards and check the balance. Buying presents with your gift cards will free up cash to use for something else.

Use uChoose Rewards Points

Check your balance and transfer directly to your bank account to jumpstart your holiday savings. Learn more here.

Implement the Four-Gift Rule.

Save money by restricting the amount of presents you give your kids. The four-gift rule focuses on getting each kid just four things: something they want, something they need, something to wear and something to read. Plus a little bonus from Santa, especially for the little ones.

Make Your Own Gifts.

Get crafty and DIY some Christmas gifts for your friends and family.

Worried your homemade gift will seem kitschy? Try 100 Holiday Gift Ideas That Won’t Cost You a Penny for affordable gifts your friends and family will cherish.

Article source: https://www.thepennyhoarder.com/save-money/christmas-saving-plan/