Mid-Year Financial Checkup Mini-Series Part 4: Christmas In July

Raise your hand if you spent too much money over the last holiday season or if you weren’t able to buy the gifts you wanted to. The holidays are a stressful time and when you need to focus on buying gifts for people and coming up with the money to do so it just compounds the problem. The holidays don’t have to be stressful and since it is in the middle of summer they are probably the last thing on your mind, but now is a perfect time to do something about it.

Start Saving Now

Instead of waiting until Thanksgiving to really get serious about saving for the holidays why not start now? Sure, it may seem like you have all the time in the world but we all know how quickly time flies. Right now you have a little over five months to get ready so what can you possibly do right now? Begin saving.

Think of it like saving for retirement. Is it easier to save a little bit of money each paycheck over a long period of time or wait until you’re ready to retire and try to come up with all of the money in a short amount of time? Obviously it is easier to save a little bit over a longer period of time. Well, this is no different. With just under half the year remaining until the holiday season you can start now by saving a little bit every week or month instead of waiting until late November and realize you either have to dip into other funds or use the dreaded credit cards.

A Little Bit Goes a Long Way

To illustrate this point we will go over a typical scenario. Let’s assume that you and your spouse are both paid bi-weekly and that leaves you with 12 more paychecks between now and the holidays. How much could you both spare from your paycheck without affecting your other savings goals and meeting your expenses? $5? $10? $20? Here is what the savings could look like:

If You Both Save $5 Per Paycheck:

$5 x 12 = $60
$60 x 2 = $120 saved for the holidays

If You Both Save $10:

$10 x 12 = $120
$120 x 2 = $240 saved for the holidays

If You Both Save $20:

$20 x 12 = $240
$240 x 2 = $480 saved for the holidays

In this example I didn’t take into account any potential interest the money could earn in a high-yield savings account and just wanted to illustrate the point that a couple saving just a few bucks every two weeks can significantly reduce the strain on bank accounts or credit cards come December.

The Key to Making This Work

Without question, most people can live with a few dollars less in each paycheck. We’re talking the price of a combo meal at McDonalds every two weeks to a meal and drink at a casual dining restaurant. Living without that little extra money isn’t the hard part. The difficult part comes after the money has already been saved.

First, this money needs to go into a safe place. Could it go into your regular savings account? Sure, but it is easier to lose track of what you’ve put in or you may end up using the money for something else. The worst place you could keep it is in your checking account or another account easily accessible by either online transfer or ATM card. The easier it is to access the money, the less likely it will be there come December. Create a new account if you have to and treat it like a mini-retirement account.

This is the perfect time of year to begin thinking about the holidays even if it is the last thing on your mind. It only takes a few minutes and a few dollars to begin the process now. Once it is in place you will have a nice little stash of money set aside to help with buying gifts or travel later in the year. You will have enough stress dealing with your in-laws, don’t let worrying about money make it even worse.

Mid-Year Financial Checkup Mini-Series



Filed Under: Personal Finance

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+.

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