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Christmas in July: How to Start Setting Aside Cash Now for a Debt-Free Holiday Season

Planning six months ahead for Christmas might seem like a bit much, but the earlier you start saving, the more stress-free the holidays will ultimately be.

July 15, 2021

In 2020, the average U.S. household spent an extra $1,387 over the holiday season. Fast forward to this December, and if you don’t have that extra grand tucked away, it’s easy to imagine slipping into debt to cover gifts, travel, and other holiday expenses.

Planning six months ahead for Christmas might seem like a bit much, but the earlier you start saving, the less you have to put aside each month. The less you have to worry about saving, the more stress-free the holidays will be. With a six-month jump on the holiday season, saving enough could be more successful than ever. 

Read on to learn how you could start saving today to avoid overspending during the festive season. 

Creating a Christmas Account

The holiday season may feel far away now, but it’ll be here before you know it. When you start saving for holiday spending, it can be tempting to park the funds in your regular savings account. However, that makes it easy to spend the money on other expenses or just neglect your savings goal altogether.  

If you’re wondering how to save for Christmas and other holiday gift-giving occasions, consider setting up a high-yield savings account, separate savings account or using the “buckets” feature many online banks now have. When you physically put the money somewhere else, you might be less tempted to spend it and more excited to save.  

Determining How Much to Save

With a separate savings spot set up, the next step in planning ahead for Christmas is figuring out just how much you need to save. 

Not sure how much to set aside? Here’s how the National Retail Federation breaks down the average holiday spending: 

  • $650 on gifts 

  • $230 on food, decor and other specialty holiday items

  • $117 on miscellaneous purchases

That’s $997 total over the holiday season.

Alternatively, try checking out your spending from last year. Comb through bank statements and budgeting apps to determine how much you spent on gifts, decor and travel. 

Once you’ve got a savings number in mind, it’s time to plug it into your budget. For example, if you wanted to save $997 by December of this year, you could divide the total by the remaining months (997/5). If you saved $199.40 each month, starting in July, you’d meet the $997 goal by December, just in time for the holiday season. 

Breaking down your overall savings goal into monthly amounts (or even weekly or daily) can make the question of how to save for Christmas feel less daunting. 

Start Holiday Shopping Season Early

For those who can stay extra organized, it might make sense to start shopping for Christmas early. If you know what gifts you want to purchase for friends and family, you can track prices and figure out when’s the best time to buy.

Set up an organized shopping list where you can track what you plan to buy for each person on your list. Then, you could use online tools that’ll notify you when these items have price drops. Consider using an online price tracker like Honey or Camel Camel Camel to help predict if an item is at its lowest price. If you plan it right, you may end up saving money and be finished with your shopping list before autumn leaves even hit the ground.

However, this approach may not work for everyone. You’ll need to be organized and committed to staying within budget. Otherwise, you’ve just kicked off a six-month holiday shopping period where you might be tempted to overspend.

Cutting Unnecessary Expenses 

If you know your budget’s already too tight to meet the monthly savings goal, think about how you can cut expenses to make space in your budget to save. 

Try any or all of the following to find extra cash in your budget: 

  • Cutting the cable cord. Cable subscribers spend an average of on their packages. If you were to go without premium channels for a few months, you’d already have close to $100 put away in holiday savings each month. 

  • Canceling subscription services. Americans, on average, spend on digital subscriptions. Consider going without some for a few months or rotating between the services you use to meet your savings goal. 

  • Avoiding meals out. The average home spends on meals out of the house. If you ate only at home, even for just a month, that’s another $250 you could deposit into your holiday savings account. 

  • Selling trash for cash. The holiday season will bring more gifts and stuff into your home, so why not start decluttering early? Collect everything from old books, gently used clothes and dated electronics to sell. Try eBay, Facebook Marketplace, Poshmark or even your local flea market. Set aside profits from your sales for seasonal spending. 

Reexamining your budget to eliminate unnecessary expenses might help you save faster for holiday spending. 

Adding a Side Hustle, or Doing More with Less

If cutting back expenses isn’t enough to meet your savings goal, it could be time to kick a side hustle into high gear. Whether it’s taking on a seasonal employment opportunity, starting a lucrative side hustle, you could take the majority of your income from a side gig and set it aside. 

Alternatively, consider cutting back on your spending this holiday season. Perhaps you could do a homemade gift exchange with friends and family or set smaller spending limits on gifts. Some families opt to draw names for their gift exchange, which limits the number of gifts each person purchases. Sometimes, even just setting aside time to spend with people can feel like a gift.   

It may be summer now, but the holiday spirit will come roaring in before you know it. For many, learning how to have a debt-free Christmas is the best gift they can receive – whether that means saving up for seasonal spending or deciding to cut back on expenses overall. 

Something that’s decidedly less cheery? Credit card debt. If debt is keeping you from saving for the holidays this year, consider Tally. Use the debt payoff app to get out of debt faster and smarter – and can even save money along the way.