Saving for the Holidays Year Round

How my wife and I budget for the holiday season year-round

Here is a brief post that I thought would be important to post now, rather than later in the year.  It is currently the beginning of May 2021.  I recently received my paycheck and as I advocate so often, I “pay myself first.” 

For those that are not familiar with this concept, “pay yourself first” is the idea of prioritizing your savings immediately following receiving your paycheck.  The idea focuses on transferring money to your retirement accounts (if not already taken out prior to deposit into your bank account), as well as to your investments, student loans, etc.  By prioritizing allocations immediately to these areas, you remove the temptation to spend that money elsewhere.  Further you are able to then build your budget around what money remains.

Factor holiday budgeting on January 1st

With that out of the way, my wife and I always pay ourselves first.  Money is moved into my retirement automatically.  I also move money into our investments.  One of the final things I do is place $250 a month into a shared savings account that is labeled “Holiday Fund.”  My wife also deposits an equal amount.  By doing this we are able to put approximately $2000 towards our holiday fund within four months. 

Tis the season…of financial anxiety

Now, I think it is worthy of mentioning that not everyone celebrates the holidays.  If you are one of these individuals, then maybe this post is applicable to you during a different time of year. 

I also think it worthy addressing that the monetary amount people are comfortable spending during the holidays varies as well. 

No matter what your budget or approach towards holiday gifting, I would venture to say many of us experience a sense of financial pressure during this time.  It is for this reason that a few years ago I decided to prioritize these savings at the start of the calendar year.  For my wife and I, we were already so motivated to paydown our debt immediately after receiving our monthly paystub, that prioritizing a small amount of money monthly towards preventing financial mishaps in December seemed like a no-brainer.

How we do this exactly?

We share an online banking account that has access to each of our personal bank accounts.  This is the same banking service that houses our emergency fund. 

With the majority of online banking, you should be able to open another savings account with the click of a button once you are established. 

When we get paid on the last day of the month, we pay ourselves.  Simple. When we are in the process of moving our money around, one of the many things we do is transfer $250 from our respective personal checking accounts into our joint “Holiday Fund.”  We are then able to reach our savings goal of $2000 normally by April or May. 

Holiday savings…done.

Given that this money will be spent in its entirety (mostly) in less than a year’s time, we do not find it necessary to place it in a short-term investing fund.  

How did we settle on $2000?  Well for starters this was a number reached through trial and error. 

Early in our budgeting education we learned about the burden of Holiday gifting the hard way.  Like so many others, we approached the season with a sense of dread.  Where would this money come from?  How much should we save?  Would we have to sacrifice student loan payments to afford gifts? 

By retroactively reviewing our gift expenses during our November and December budgets we were able to deduce a rough estimate of our annual Holiday gifting expenses.  From here it was only a matter of saving that approximate amount during the months prior to December.  We settled on $250 as our monthly savings because it was an amount that did not seem to affect our monthly budget, and further it allowed us to complete savings with months to spare. 

Feel free to make modifications based on your needs. 

Take home points

I will end you with this.  The holidays for me are always an interesting time.  The idea of the holiday season is one I find beautiful, but the gifting culture around it so often seems excessive.  Gifts do not necessarily have to be the best or most expensive item to have the biggest impact. 

When I approach the holiday season, I want to be able to enjoy my time with family and friends.  I want to reflect that the money I am spending to bring enjoyment to others was prioritized over so many other uses. Further, I want to not feel frustration in that. 

Budgeting for the holidays early allowed me to feel more at ease as the spending season approached.  I felt prepared knowing that we had an amount set aside that would not effect our November or December budgets.  This truly helped me further enjoy the giving season.  I hope it will for you and yours.

And as always…

Stay motivated!

The Motivated M.D.

I hope this post helps you feel less stressed during the Holiday season. If you have other advice on how you save for the giving season, let me know in the comments below. I would love to hear from you!

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