Somehow the holiday season is already upon us, which leaves one big question—just how are we supposed to save up for holiday expenses? Whether you’re starting early or the holiday countdown is running out, we have tips to help with your holiday finances.
Make a monthly budget. If you already have a monthly budget, that’s great! But if not, it’s time to make one. Record all of your expenses and break down your other spending into categories. You may be surprised by what you find—whether it’s the amount you spend going out to lunch or how much the occasional shopping splurge adds up. When drafting up your budget, decide how much you can afford to spend on each category, set your budget accordingly—then stick with your financial plan!
Look for small savings. Remember, you don’t have to completely eliminate an entire expense category in your budget to start saving big: small savings add up over the course of a month. Take a careful look at any nonessentials in your budget and think about where you could cut back. Meals out are a good place to look first: from daily coffee shop stops to frequent workweek lunch splurges to dinners out with friends—all of theses expenses start to add up. You can spend a lot less by skipping your fancy coffee drinks, packing your lunch, and turning dinners out to dinners in. While your morning stop for coffee and a muffin may seem like a small purchase on its own, skipping it or limiting it can add up to big savings. Anything in your recreation budget is a good candidate for temporary cutbacks—and an easy category to scale back on the things you can probably do without for a month or two.
Look for long-term savings. Though small spending sacrifices can help you meet short-term savings goals, there’s no reason not to think long-term, too. Look at your bills and consider where you may be spending too much. Is your car insurance outrageous? Shop around for a better deal. Are you paying for cable channels you never watch? Switch to a different package, a different provider, or simply cancel the service entirely. Oftentimes you can cut down on your monthly expenses by checking out competing prices—and while it might not fund your entire holiday budget, it can help you save year round.
Make a holiday budget. Your regular monthly budget most likely doesn’t account for holiday expenses. If this is the case, then consider creating a separate budget that will allow you to keep track of your holiday spend and expenses. Not only will it help you figure out what you need to buy this holiday season, it will set a savings goal to work towards. Take a look at how much you spent during the holiday season last year, consider what you need to purchase this year (gifts, decorations, cards, food, travel), and then approximate what you expect to spend on each item.
If the first draft of your budget isn’t practical, it’s time to consider what you can do without. Would your holiday dinner be better as a potluck? Could you set spending limits on gifts to help the whole family stay on budget? Would sending out electronic holiday cards work just as well as purchasing and mailing traditional holiday greetings? Be creative until you find a holiday budget that works with your targeted savings goals.
Start early! If it seems too late to start saving early now, it’s never too early to start saving for next year. The easiest way to save is to do it in small increments over time: setting aside $50 every month for your holiday fund probably isn’t a huge hardship, and would add up to $600 over the course of a year. Another great way to start saving up for next year’s holiday season is to consider opening a certificate—also referred to as Money Market Certificates at PenFed. Now is a great time to open one with PenFed because our rates are among some of the best available in the nation!
Starting early can also help you spend less when the holidays roll around because you’re more likely to find holiday essentials like cards, decor, and lights on sale after the holiday season. Planning ahead means you can grab these items for much less, and be ready for next year’s holiday season without the financial burden or fuss!
Having the right checking account can help
Ready to start saving? Make sure you have a checking account that helps you meet your savings goals. PenFed’s Access America Checking has no monthly service fee if you have a daily balance or monthly direct deposit of $500 or more. You’ll also earn dividends ranging from 0.20% APY to 0.50% APY with direct deposits of $500 or more and a daily balance of up to $50,000 per statement cycle.1
And, of course, with PenFed’s Access America Checking, you get all the conveniences of PenFed: mobile access, more than 57,000 free ATMs, a chip-enabled debit card, and $0 liability on unauthorized debit card purchases—which means you can shop with confidence throughout the holiday season, and all year round!