With Christmas just around the corner, I am reminded about the yearly struggle that is the credit card bills of December and January.
If not properly planned for, Christmas shopping can derail your family budget at a time when it is so easy to fall off the wagon. But with proper planning, you can take steps to make sure next Christmas does not catch you off guard.
So what is the best way to save for Christmas presents?
I suppose the most logical answer is “monthly.” This way you are spreading the pain of Christmas spending through the entire year, allowing you to stick to your budget during the holiday season. This creates a good feeling as you start the new year knowing that you were able to stick to your plan.
Consider using an automatic monthly transfer from your checking account. For my family, I use SmartyPig, which is a fun way to create individual savings goals which operate as subaccounts to your SmartyPig account. If you use a service like this, you can put away $100 bucks per month (or more, or less), and have that money available as you enter the month of December. Even better, SmartyPig allows you to redeem your savings as gift cards with cash bonuses, so you could actually end up with more money to spend on gifts than you thought.
Fortunately for me, I am able to “cashflow” our Christmas gifts this year because we are not having an extravagant Christmas. Last year I allowed us to spend more than usual, because my wife was forced to spend the previous Christmas in the hospital due to complications with the birth of our second child. It just felt right to let her buy more presents to spoil her kids.
But it didn't feel right when January came and I was unable to make my Debt Snowball payment. The snowball calculator showed I was off on my estimates anyway.