Saving for Christmas

Saving for the holidays is an interesting proposition. What makes it really interesting is that it comes every year at the same time. Everyone knows the holidays are coming and yet, most people still do not save. The shopping becomes a strain on your budget and an added stress for having to complete your shopping in a short amount of time.

My wife and I are no exception to this rule. Here we are less than two months away and we literally have $109.12 saved. Considering we typically run a $1000 holiday budget, one could say we are a little behind. What are the consequences for this behavior?

  1. Have to pull from other savings to make up the difference
  2. For November and December, no contributions to our IRA
  3. November and December will be cash poor
HAPPY CHRISTMAS BOKEH! by kelp1966 on Flickr

Photo by kelp1966 on Flickr

This happens every year. This year is particularly bad on our part. Now that we’ve seen how things work in the worst way. Let us look at how saving for Christmas should work.

Every year brings set amounts and times for the Holidays. We know that our family limit is $1,000. We also know that we will probably start shopping in November and continue until Christmas Eve. These things happen every year without fail. Now that we know this, it’s easy to set up a plan to relieve our stress and not strain our end of the year budgets.

Family Spending Limit

I recommend everyone set a spending limit. This concept seems like a restriction, but in the end it is freeing to know how much you have to spend and allows you to make smart decisions. My wife and I chose $1,000 dollars after a year when we spent $3,000 by mistake. If you do not track spending or have a limit, it is easy to keep spending aimlessly. The year we spent $3,000, we had no idea until after Christmas that it had happened. We promised ourselves that would never happen again, and it has not.

My wife and I have rather large extended families including a ton of young children. The $10 to $20 dollar gifts add up quickly. Considering our family size and our income we decided we could safely spend $1,000. This number is high for some and low for others. The exact amount is not the point, but rather committing to limit your holiday spending. Make sure your limit is something reasonable and achievable for your situation.

Create a Holiday Savings Stash

My wife and I have a savings account which has all of our savings for yearly expenses (life insurance, disability insurance, Christmas), on-going maintenance (cars, house, and furniture), charity, vacation, etc. We keep track and allot the money into each fund.

As we said above, we know that we will start our shopping in November, this means that we have 10 months to save $1,000 dollars. These numbers are too easy. So our family needs to save $100/month from January to October. That seems so simple in theory. My goal next year is to actually follow through on this plan.

In the past I have relied on income from my side company (Vanguard Web Studios) to bring in the extra income, but this year that did not happen.

There is one other trick I do to collect money for the holidays. As the year progresses, I move the small amounts of interest we get on our savings and checking accounts into the Christmas fund. Actually that is where all $109.12 this year came from. It’s not a ton of money, but it helps. It such a small amount of interest and comes from accounts that are not meant as investment accounts.

Buy Consumable or Educational

After having kids, my wife and I realized how quickly people’s generosity can turn into clutter in the house. So with that in mind, we have switched our gift giving policy to the following goal. The gifts are either consumable or educational. I love the idea of giving a gift which is a treat to receive but isn’t going to stick around for the rest of the person’s life. I also love the educational route especially for kids. There are many wondrous products out there which are fun, educational and still entertaining.

Last year for all of our neighbors, my wife baked up a couple batches of different cookies, and passed out goodie bags. It was a very inexpensive way to tell them that we appreciate them without putting stress on us or adding clutter to their lives.


While it is too late to carry out a saving strategy for the holidays this year, it’s good to start thinking about it for next year. Also, it may help you to stay conscious about your spending as it happens. You still have time to set a limit and stick to it. If you plan for your holiday spending, you may just find that you end up enjoying your holiday season much, much more.

In disclaimer, I do realize this article does not apply to everyone; however, one may apply the concept to any yearly expense that comes during a consistent time and is an impulsive spending amount.

About Kevin Jones

I am the owner of KJW3, LLC and the producer of Free Zero Based Budgeting. I enjoy learning and spreading knowledge about personal finances and zero based budgeting. Please enjoy our blog and zero based budget tool.
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