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I'm a huge advocate of setting money aside for bills or expenses that come due on an irregular basis.  Your cable bill is easy, you pay that every month, and it's generally going to be the same amount for at least 6-12 months at a time.  Your electric bill might a little trickier since, even though you'll have one payment per month, the payments will be uneven due to the varying usage that you'll have because of air conditioning and the like.  Still, it's manageable.

But what about expenses that come due on an irregular basis?  Like Christmas gift spending.

mb-201307giftToday is July 25th, so it's about the closest you'll come to ‘Christmas in July' that I can think of.  Which, by the way, is there any basis for this phrase other than my guess, which I'd think ties to retailers trying to drum up sales during what are often excruciatingly slow summer sales months?  Well, since it's ‘Christmas in July' day, I thought it would be a great idea to focus on the expenses, and check to see if you've started saving yet, and let you know how we're doing.

What's The Big Deal?

The big reason for saving now is because of the sheer cost involved.  Let's face it, Christmas and the holidays have grown in size to where many retailers count on making all of their profit for the year during the Christmas selling season.  Think about that, many places you visit on a regular basis are not making a single dime for nearly 11 months out of the year….and they're OK with that.

But, with this comes the urge to spend more and more.  And we do.  Sales around the holidays have grown steadily for the last couple of years as the economy has improved, and this means that you're probably spending more.  Spending around the holidays can add up to some big bucks, and it's best to make sure you can afford your purchases, and what better way to ensure this than to have money specifically for these purchases.

Is It Too Late To Start?

The answer here is, no!  It's never too late to start saving for Christmas.

What's The Point?

The biggest reason for saving for Christmas is to avoid coming out of the season with credit card debt.  Let's face it, there are a lot of purchases and the temptation is to swipe the card at every store.  Still, those purchases add up quickly with the number of gifts you might have so that Santa gets everything crossed off his list.  Many people find that their credit card balances swell around this time of year, something that the credit card companies are all too eager.

What's The Impact?

The impact of letting this happen is that you'll pay more for the gifts you're buying than what you pay at the register.  That $40 sweater for your mom might turn into $60 or $70 by the time you pay it off and add in the associated interest charges.  As you shop, ask yourself, is this item worth double the cost on the tag?  Most times, the answer is ‘No', so don't get tricked into paying that anyways!

But I Know I Can't Save Enough, Should I Bother?

If you're in the middle of enjoying the hot summer temperatures, winter and Christmas shopping may seem forever away. That is, until you realize that even if you started saving $100 per month today, that's not going to cover the $1,000 you plan on spending on Christmas gifts.

So, the temptation is not to bother.

Big mistake.  You should definitely bother! 

Even if you only save half of your planned spending between now and then, you'll be cutting the amount of interest you pay in half.  It doesn't have to be an all or nothing thing, because if you choose not to save it, chances are you'll find something else to spend that money on instead, and you'll be that much further behind.

In some cases, doing it halfway is better than not at all.  This is assuredly one of those cases!

Won't This Make Me Just Spend More?

If you normally spend $1,000 on Christmas, and this year, for the first time, you set that aside, you're going to feel pretty good about that.  So good that it might be tempting to increase your budget a bit.  After all, it'll be easy to justify spending an extra $500.  After all, you're so used to paying interest that this is going to mean you can spend more and only pay half the interest.

Don't do it.  The whole point of saving for Christmas up front is to keep your money in your pocket.  As much as possible.

How Do I Make This Happen?

If you think you could fall into the trap I described above, then in addition to saving, you should start setting a budget.  Now.  List the people you need to buy gifts for, and set a budget.

Then, find a way to stick to it.  Hold yourself accountable when the time comes to spend that money.

How Am I Doing?

We stared saving for Christmas throughout the year several years back.  This has helped us out a lot.  We set aside around $70 per month, and we also allocate a portion of our tax return for our gift fund.  This definitely makes Christmas shopping a lot easier.  Let's face it, the holidays are stressful enough without having the added stress of worrying about how you're going to pay for those gifts.

So, do yourself a favor and start saving today.

Readers, do you save for your Christmas purchases throughout the year?  If so, what's your strategy and how are you doing?   Happy Christmas in July!