Hey Taylor – I’ve barely finished back-to-school shopping and I’m already panicking about Christmas presents. Am I crazy? Do I need to settle down? Or should I lean into the panic and start setting money aside? – Caitlyn

Hey Caitlyn – In a perfect world, people would start padding their holiday savings on January 1st. That’s crazy for most people, but the alternative—not having anything saved up when December hits—is even crazier. It’s good that you’re thinking about it now, because getting an early jump can make all the difference.

–1. Save incrementally. The best way to budget is to put a modest amount of money aside with enough regularity to make it add up. Finding $30,000 for a new car is very difficult; saving $500 a month for a couple of years is much more feasible. If you can put aside $20 a week for the next three months, you’ll be in pretty good shape when it comes time to do the series Christmas shopping. The earlier you start saving, the smaller the monthly allotments can be. That’s why I half-jokingly say you should start saving in January, but it’s only half a joke. If you budget $40 for holiday expenses every month of the year, you’ll never hit October and think, “Oh no! I forgot to save!”

–2. Deals don’t wait for December. If you hit the mall on December 15th with the rest of the world, you’re not doing yourself any favors. Meanwhile, if you’ve got the money and an eye out for gifts on November 1st, you can find some good bargains during that strange window between Halloween and Thanksgiving. One of the greatest stress reducers is being able to knock out a portion of your shopping well before the holiday season is upon us. If you can spend $30 now on something that will cost $45 two months from now, that’s some very sensible shopping.

–3. Think it through. The biggest reason to start budgeting early is to plan ahead for the millions of expenses that catch people off guard when the Christmas music is playing and stores are beckoning people to buy buy buy. You may spend more on gas if you’re driving to see family and other festivities; you’ll eat out more as you spend long days at shopping centers or traveling from holiday gatherings; and you’ll invariably forget about the office gift exchange that costs you $20 each year. Budgeting for those incidentals now, even if it feels like it’s too expensive, will help you avoid that “oh no” moment where you realize you have to spend a lot more than you have.

Start now, Caitlyn. If possible, start yesterday. There’s nothing crazy about planning ahead so you can have a fun holiday season without making it unbearably stressful. Good luck!

 

Taylor Kovar, CFP®

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