This week’s blog in our Financial Planter series is written by Deacon Hayes, Guest Blogger, who is a Personal Finance Expert*
The holidays are months away, but now is the perfect time to begin saving for gifts. According to last year’s Gallup poll, Americans planned to spend $830 on Christmas gifts – a record high for the U.S.
If you’re planning on paying for those holiday gifts in cash - and don’t have a windfall of cash coming your way this winter – today’s the day to make your plan to save. Here are some tips for storing away that spending money.
1. Determine Your Budget
Decide who you’d like to give gifts to and how much you plan to spend on each person. Don’t forget the extras outside of family and friends, such as teachers, salon workers, your postal service, landlord, and other service persons who you would like to give to this year. Once you have your budget in place, you can begin the work of setting aside the extra cash and saving toward a debt-free holiday.
2. Pick a Holding Place
Most experts recommend a separate savings account for gift savings. Many banks and credit unions even have special savings accounts designated for those who like to save for gifts ahead of time. By putting the money you’re saving toward gifts in a separate savings account, the chances are less likely that you’ll spend the money on something else. If you’re not interested in keeping the money at a financial institution, use a well-hidden cash envelope or some other safe place at home to store your savings.
If you’re concerned about being tempted to spend the money, consider giving it to someone you trust who will hold onto it for you.
It’s also wise to avoid saving your gift money in an investment account that can lose value. You wouldn’t want your hard-earned cash to diminish due to a market dip, leaving you with less money than you had planned on saving for gifts.
3. Make Room in Your Budget
Now it’s time to find the money you need to save for your gift budget. Divide the amount of money you need by the number of weeks until you need to complete your shopping. Once you have that number, determine how you’ll work saving the cash into your budget. Here are some tips for finding that extra money by cutting expenditures:
- Reduce entertainment spending and gather with friends at home or at free events.
- Forego half or more of your monthly restaurant expenses.
- Temporarily discontinue extra services such as cable TV or music subscriptions.
- Cut your grocery expenditures for the next few months by menu planning around what’s on sale and foregoing soda and other snack food purchases.
- Look to reduce auto insurance costs by shopping around for the lowest price.
Go through each line item on your budget and ask yourself, “How can I reduce or eliminate this expense?”
4. Find Extra Income
A temporary source of income can provide hundreds of dollars each month toward your holiday savings goal. Here are some ideas for finding extra income to pay for Christmas gifts:
- Get a second job for the holiday season. Many retail stores and restaurants hire employees to work just through Christmas.
- See if there are extra hours available at your current job.
- Look online, for example on Craigslist or Upwork, to find a side hustle that piques your interest.
- Work to find jobs right in your own community such as dog walking, tutoring or babysitting.
There are many sources of extra income available at all times; however, businesses and families often need an extra helping hand during the busy holiday season.
5. Plan Now for the Type of Gift You’ll Give Each Person
By planning ahead regarding what type of gift you’ll give each person, you can buy items on sale when you see them. This will help you stay within your budget and avoid last-minute, panicked shopping rushes that can lead to extra spending.
By starting to save now for the holidays, you can be sure that the extra expenses won’t put a detour in your quest for financial security.
About the Guest Blogger: Deacon Hayes is a Personal Finance Expert who has helped thousands of people develop a financial game plan so that they can achieve their financial goals in life. He started out as a Financial Planner for an investment advisory firm assisting high net worth individuals. After realizing that his passion was to serve the average person, he quit his job to start his own financial coaching and curriculum company called Well Kept Wallet in order to help average people get from where they are to where they want to be with their career, money and lifestyle. He has been featured in the US News & World Report, MSN Money, Yahoo Finance and more.
*All content provided in this blog is supplied by Deacon Hayes and is for informational purposes only. Barclaycard makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.
Image credit: Shutterstock