We are quickly approaching the end of October and if you haven’t started to think about it already, you will be over the coming few weeks. The biggest problem many of us face is our desire to spend money on loved ones, yet not having the money available to spend. Being the giving person you are, you probably spend more money than you can afford to or stash all of the holiday purchases on credit cards, paying for them for many months to come. The good news is, it is not too late to get ready for the holiday shopping and not break the bank. Does shopping for holiday presents stress you out? It shouldn’t have to, and there are a few things you can do starting today to make the holiday season come and go stress-free (at least as far as finances are concerned!)
First, it helps if you have a holiday fund set up. You don’t have one you say? No problem. Given it is approaching Halloween, you most likely have roughly four pay checks coming between now and the holidays if you are paid bi-weekly. If you are paid weekly or monthly, you can figure out your particular schedule. So with still a few paychecks to be made, now is the time to start putting money aside. If you have four paychecks coming before the holiday, then set a goal to save part of that to go into your holiday fund. Consider it a bill, just as you would any other bill you need to pay. Maybe it is $50 per pay, or maybe $100. Guess what, even those little amounts spread out over the course of a few months can add up to a nice little pool of money come shopping. Regardless of how much you are able to put aside, at least it is that much less you have to put on a credit card, or it is that one perfect gift you really wanted to give someone.
So, you’re putting a little cash away over the next few months, how can you prepare this for next year? Start now! Don’t wait until October again, but get started preparing for the holidays early. To do this, simply go to your bank and open a new account. Could be savings or checking, doesn’t really matter. Whatever you do, make sure you don’t have easy access to the money. If it comes with a debit card, don’t put it in your wallet. If it is visible online, don’t use it to transfer funds to your other account. This account is only to hold holiday shopping money.
Now there are a few ways to start saving. First, utilize direct deposit. Most people use direct deposit, and many employers allow you to specify various accounts and dollar amounts into each account. My suggestion, change your direct deposit to put a few dollars into this separate account each pay period. If you were paid bi-weekly and had $10 go into that account each pay, you’d have about $260 after one full year. If your spouse does the same thing, you’ve painlessly saved over $500 in holiday shopping cash. Of course, putting a little more into that account will just result in even more money saved. How many of you would be unable to pay your bills and live a comfortable life if you had $10 come out of your paycheck each week? Some employers even offer this service automatically via a “Christmas Club” or some other setup. This is the same thing, only the employer takes care of the account and the money until you need it as opposed to you handling the setup of the bank account and changing your direct deposit.
If you don’t have direct deposit, don’t worry you can still accomplish this. It just takes a bit of discipline. You just need to manually put money into this account everytime you are paid, and remember to do it. Many banks now have the ability for you to setup automatic transfers from one account to another on a recurring basis. Synchronize these with your paychecks and it will do the same thing.
Coming up with money at the end of the year doesn’t have to be painful if you plan ahead. You can not only save yourself the stress of not having the money available, but you can more than likely avoid putting more charges on your credit card and paying additional interest as well.
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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.