How to have a financially stress-free holiday season

How to have a financially stress-free holiday season

There are expenses in life we can’t plan for and that’s why we have a rainy-day fund. But there are also many expenses that we can plan for and just don’t. The holidays are a perfect example.  They come around every year and yet almost half of us get stressed out about money around the holidays. 

The good news is, we can start planning for them. The sooner we start planning for them each year, the less pain we’ll feel financially. 

Here’s a step by step plan to start saving for the holidays (or any other larger expense). 

What’s important?

Get clear on what’s important. What are your favorite holiday memories? What made those memories special? 

What do you want to spend?

What do you plan to spend money on this year? For example, you may want to buy gifts, travel, host a party, account for extra dining out, purchase party clothes, or need to pay for additional transportation. 


Run the numbers.

Get specific and add up the numbers. For example, if you listed gifts above, how many gifts do you plan to buy? What will you plan on spending on each gift? If you decide to buy five gifts and each costs $50, that’s $250 in total spending on gifts. You can make a spending estimate for each item on your list. 


Get fabulously frugal. 

Is there any way to reduce the numbers above while maintaining the quality or making it better? Going along with the gift example, instead of getting five gifts, you might decide to do a Secret Santa where you everyone gets someone a $50 gift. This adds some excitement to the process. Now you’ve reduced your total spend from $250 to $50 in the gifts category.

Create the space. 

Next you want to make the space for your holiday fund. I highly recommend creating a separate account in your online savings account specifically for holiday spending (and any of your other larger, less frequent expenses). 


Consider your income. 

How many paychecks do you have from now until you plan to make each of your holiday purchases? Look through the calendar and count them out. 


Map it out. 

Calculate it out. If you plan to spend $500 and you have five paychecks until you plan to spend it, then you will want to put aside $100 per paycheck. 


Make it automatic. 

Set this up to be automatic. Have whatever amount you calculated per paycheck transfer over automatically to your holiday fund. In the example above, you’d set up a $100 per paycheck automatic transfer to your holiday fund. Then the cash will be there waiting when it’s time to start your holiday spending.  

Plan ahead for next year. 

Plan ahead for next time. Start as early as possible to minimize your holiday stress next year. Ideally, star right after the holidays are over. $500 over 24 paychecks is just $21 per paycheck!