Money Talks, So Should You

Make a budget for Christmas and the holidays in August

Hannah Kim
by Hannah Kim, Staff Writer (@dimespring)

Although it’s “only” August, this is your friendly reminder to start budgeting and shopping for Christmas now.  Yes, Christmas is still about five months away, but last year the average holiday shopper spent $700 according to the National Retail Federation, which means you’ll have to start saving about $140 every month until Christmas if you spend as much as the typical holiday shopper. This may put you in a tight squeeze, especially if you’re already spending close to $690 this month alone on back-to-school shopping supplies, according to NRF’s current estimate.

So now would be a good time to budget for the holidays and special occasions which you need to buy gifts for people. The sooner you start the better, and your budget will always be a good reference for the future.

Here are a few tips on how to save from now until December.

Make a budget for all holidays and special occasions: Review what you spent for the holidays last year. If you didn’t have a budget, make one now for Christmas and special occasions for the rest of the year. Look at each month and figure out the birthdays or holidays that you need to buy gifts for.

READ: Is it Best to Budget Monthly or Annually?

Also, when you budget you shouldn’t rely on expected bonuses, according to Jeff Kostis, president of JK Financial Planning.

“Bonus amounts have been shrinking in recent years with the tough economy, and starting off next year in the hole with more credit card debt is never fun,” said Kostis.

If you have trouble sticking with a budget Kostis suggests to check out “Christmas Club Savings Accounts” which restrict you from taking out the money until November.

Many of these accounts are still available at many credit unions.

Make your list now: The more specific your budgeting goals are, the easier it will be to reach them. Write down who you need to get gifts for and think about what you’re going to give them. For instance, if you know you want to buy someone a big ticket item such as a tablet, see if it falls within your budget. If you can afford it, keep your eye out for sales on tablets or other items on your list; you don’t always have to wait until Black Friday for a sale. If there is no way you’re close to affording it, think of something else to give, or see below tip:

Collaborate with friends and family: Agree on how much to spend this year so no one feels bad about over or under spending. Every year my family and relatives agree on a limit to spend and also make a wish list with items that fall under this limit.

But if you know someone is really dying for an expensive item, Kostis suggests collaborating with others to help pay for it.

“Many older kids would rather get one iPod Touch from five family members than five smaller gifts that total to the same dollar amount,” Kostis said. Likewise Kostis said a young kid doesn’t care how much toys cost as long as they’re fun. “For them, a fun toy that costs $5 is much better than boring toy that costs $50.”

Take advantage of loyalty programs: Carmen Wong Ulrich, President and Co-Founder of ALTA Wealth Management, says not to forget your reward and loyalty points with credit cards.

“This is going to be the holiday of reward and loyalty points. So many folks have loyalty and reward points building and building but they're not using them. This is real money!” Ulrich said. With her rewards points, Ulrich was able to get her daughter a fancy mini-kitchen.

“To rack up points now, start using only cards that offer rewards and sign up for retailer loyalty cards so you can bank on real discounts when you shop this holiday.”

READ: Smart Tips for Choosing Retail Loyalty programs

Make Homemade gifts: Homemade gifts are great because they are unique and personal. Think of things you can make such as a sweater or artwork. But also make sure you start early and that you can complete your gifts on time. Other examples are home baked goods. Ulrich said her sister once made biscotti and put them in clear mason jars with lovely handmade fabric sashes and a bow for a beautiful, personal and very inexpensive gift. You can also do DIY projects if you know someone needs help renovating a room or upholstering some furniture.

Personal finance author Barbara Stanny also recommends giving handmade gifts.

“One of my daughter beads and makes jewelry for gifts. And I have another daughter who makes collages as well as calendars of herself. I love it because I see a new picture of my daughter every month.” Stanny also suggests just buying presents for immediate family and getting gag gifts for everyone else which is cheaper but also a lot of fun.

Buy in bulk: Buying in bulk is cheaper but doesn’t mean they’re unpopular. I once bought purse hooks in bulk on for all the women in my extended family and they all loved it. Lotions are always useful in the winter and there are always good deals on them such as 10 for $10. Also look into tickets to attractions like a zoo, aquarium, amusement park, or concerts for group deals.

Give the gift of time: Maybe you’re a busy parent who misses out on all your kid’s baseball games or maybe you only get to see your nieces and nephews once a year.  Whatever the case may be, Kostis says your time will mean a lot to kids.

“Taking your nephew to a minor league hockey game or having a sleepover with your niece will be remembered long after they stop playing with the toy you could have bought.”

Have any favorite tips on how you save money for the holidays? Share with us below in the comment box; we'd love to hear from you.

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Hannah Kim is a personal finance reporter at Dimespring. She has a master’s of journalism from the University of Maryland and has written for The Business Insider and Before changing careers to journalism, she previously worked in the finance industry for six years in New York City.