How To Prepare For The Holiday Season Financially
Holiday season can be a big burden financially. Depending on your family and traditions there can be gifts, extra food cost from entertaining family, travel costs, holidaying costs, and if you have kids there’s the cost of entertaining them and having them taken care of over the school holidays if/when you have to work. And that is just the money side of it.
Holiday season can get stressful, fast and financial pressure won’t help that.
So here are some steps you can take to prepare for the holiday season financially.
When should you start thinking about the holiday season?
How about the 2nd week of January? Just kidding, kind of.
In all honesty, the sooner you do start, the lower the financial impact on your budget while you prepare.
For example let’s say that you determine you’ll need $1,500 for the extra costs that you have to pay during the holidays. If you start saving now (this post is coming out at the end of August) you will have about 4 months before Christmas.
In order to put $1,500 aside in 4 months you’ll need to save $375 per month, or about $94 per week.
What if you had longer to save?
If you had 6 months the amounts would be $250/month or about $63/week.
12 months brings it down to $125/month or about $32/week.
See how the earlier you start to prepare, the less of an impact it will have on your budget!
Even if you can’t save the whole amount you need in the time frame you have, honestly anything you put aside will help you, and feel like a relief when you get to use it.
Preparing for the holiday season financially
So where to start?
Consider what your Christmas and New Year’s look like. For many families there are traditions that are similar or exactly the same each year, making the cost of it all a bit easier to predict!
Here’s a list of some common items you might need to include:
- Decorations (do you get a fresh Christmas tree every year?)
- Pre-Christmas parties (office, friends, etc.)
- Secret Santas
- Gift wrapping paper
- Gifts (who for, how much money spent per person, etc.)
- Travel to see family (accomodation, transportation, house sitter, etc.)
- Hosting family coming to you (additional food, etc)
- Christmas food (breakfast/brunch/lunch/dinner)
- Alcohol
- Experiences (like photos with Santa)
- Fireworks
If you have younger kids you may need to consider further than public holidays due to the longer school holiday, especially if you need to work. But even if you can be home with them you might want to prepare for having to fork up more money towards entertaining them.
Depending on your family long school holiday may mean extra cost in care while you work, school holiday programs, camps, extra travel, activities out of the house, and you could even create an at-home activity box you can direct them to when you can’t listen to the “I’m booooooored” anymore!
Adding up all the costs relevant to you will give you a figure of how much the holidays are going to cost you and a goal for you to save towards. Then you can divide the final figure with the number of pay cycles you have before Christmas to know how much you should put aside from each pay.
What if the figure is unrealistic?
If the expense is negotiable you might need to reduce or cut it out completely. (For example spend less on gifts, say no to that Christmas party at a restaurant or suggest a potluck dinner instead.)
And for the non-negotiable expenses the more you can save for them the less money stress your experience, and the less debt you might need to take on.
Christmas clubs
Do you take part in any of the Christmas clubs around?
They are a way to do exactly what I’ve been talking about in this post, to slowly add to the account during the year to be used at Christmas time to cover the extra costs.
But they are also a bit more of a controlled way, since by default you may not be able to access the money outside the specified time frame (often December-January).
The accounts often receive a bonus on top of the money you put in there (kind of like an interest on a savings account), to give you an incentive to use them.
These Christmas clubs may be a great idea if you are worried about dipping into your savings in the mean time but you should make sure you understand how the club works before you join.
Things to know before joining a club:
- How to put money on the account
- How and when to get your money out
- What kind of bonus you are entitled to and what are the terms to use the bonus
- Is there a limit to how much money you can have on the account
- How to check the balance, etc.
Some cons of clubs:
- You can only spend the money at that specific supermarket/retailer
- All clubs have their own set of rules, a lot to be aware of if joining a few
It is also important to consider if you could get a better interest rate on a savings account compared to the Christmas club bonus. Since you know when you will need the money you could choose a notice saver account as well, which usually offer higher interest rates.
Some Christmas clubs you may consider are Countdown, New World, Pak’N’Save and The Warehouse.
(Notice saver means that you need to give 30-90 days notice before you can withdraw your money, there are various accounts available.)
But as always, personal finance is personal! You should save for Christmas the way that suits YOU best.
If you are feeling overwhelmed with what you should include in your budget, I created The Ultimate Budget Cheat Sheet with 100+ budget items in categories to help you out! Get it for FREE by signing up to my newsletter below!
How do you prepare for the holiday season, financially or otherwise?
