Christmas is by far the most expensive time of the year for most families. From holiday shopping for gifts, to travel, to decorations and meals – the expenses add up. Instead of financing Christmas on credit cards, there are some things you can do to start preparing for Christmas now which will alleviate the after-holiday remorse.
Create a Christmas Holiday Budget
One of the best ways to prepare for the Holidays is to create a Christmas budget. Creating and sticking to a budget makes it easier to ensure you have enough money to cover your gift, travel and other holiday expenses. Whether you make homemade Christmas gifts or buy gifts from the store, creating a Christmas budget also takes much of the guesswork out of the holiday season and helps you avoid sticker shock in January.
Open a Christmas Club or Special Savings Account
Many banks offer a Christmas Club or special savings account specific for holiday savings. These accounts work like a personal accrual account. You can contribute to it all year consistently and when it’s time to start your holiday shopping, withdraw the funds.
How to make it easier. The average family spends more than $600 a year on Christmas – if this is the amount you need, start saving in December or January for the following Christmas and you’ll only need to set aside $50 a month or about $12.50 per week to reach the goal. The best way to save is to have the money transferred automatically from your check or checking account into the savings account used only for your holiday funds.
You can also set up a savings goal with the popular Smartypig.com – a goal-oriented, online savings account. The money is automatically deducted from your checking or savings account at the frequency you choose. When you’re ready to pull the money out for holiday shopping, you have the choice of having the money deposited back into your bank account, or getting the money on gift cards. If you choose gift cards, you’ll also get a bonus which gives you a little extra money to spend.
Consider Using Layaway
Another method many people use to reduce the effect Christmas has on their budget is to begin shopping in August or September and use layaway programs. Layaway allows you to select all of your purchases and place them on hold in the store. You’ll need to make a small deposit to hold the items (usually around 5% of the entire cost of your purchases), and then schedule weekly payments until it is paid in full. Once you’ve paid off your purchases, you can bring them home. The fees paid for layaway is almost always less than what you would pay to put the same items on a credit card (unless you paid your credit card in full before interest started accruing).
Layaway programs are also available online, through services like elayaway.com, and feature a wide variety of retailers who participate in online layaway. Make your selections and save them in your online shopping cart, make your deposit and schedule your payments and your items will ship once you’ve paid in full.
If you travel to visit family over the holiday season, begin your search for discounted tickets well in advance. You can sign up for email notifications when prices drop below a specified point, to help you find the best time to buy tickets.
Sometimes traveling before or after the actual holiday will save you money over dates when everyone else is traveling. Consider celebrating the holiday with family from afar just before the Thanksgiving and Christmas travel prices hit, or after the new year, when the holiday prices have dropped.