Holiday Spending: 4 Quick Tips for the Gifting Season

While we can’t help you figure out the best gifts for your friends and family, we can help you avoid some of the financial stressors that come with the holiday season. Let’s go over a few quick tips.

1. Plan ahead

When it comes to shopping for the holidays, it’s a good idea to plan as far ahead as you can. Make a list of your planned gifts and their respective prices before buying. That way you can get a better sense of how much you’re going to be spending this season, allowing you to budget accordingly. You could also take a look at how much you spent the last holiday season to help give you a rough estimate to work with.

Think about shopping early to avoid price increases and the last-minute rush. You’ll also have a better chance of snagging those popular gifts before they’re sold out. Keep an eye out for any special discounts or deals you may be able to take advantage of. 

Good to know: Having a spending plan in place can help you limit impulse purchases and overspending, leaving yourself in good shape financially for the new year.

2. Set up a sinking fund

When looking to save for the holidays, consider using a sinking fund. Sinking funds are pockets of money that you put aside for specific expenses. For example, you can create a sinking fund for the holidays and contribute small amounts regularly (weekly, biweekly, etc.) until you reach your goal.

If you’re able to set up automatic deposits, you may even want to automatically transfer a portion of your paycheck each month into a savings account that holds your sinking fund. It’s similar to the concept of “paying yourself first.” The idea is to treat your holiday saving as a separate expense category in your monthly budget, just like groceries or gas.

While you may not always be able to save as much as you’d like each month, consistency is key. Start early: Generally, the sooner you start, the less you’ll have to save from each paycheck to reach your goal.

Having a dedicated pot of money for your gift-giving can mean less stress and more time with your loved ones during the holidays.

3. Stick to your spending plan

Creating and sticking to a spending plan isn't always easy. Surprise expenses may crop up and throw you off budget.

When setting up your sinking fund budget, be specific and realistic with your expectations. Figure out how much you need to set aside and formulate a savings plan. And then check in regularly throughout the process to ensure your sinking fund is on track. With a well-thought-out savings plan, you can enjoy the holiday season without accruing debt.

4. Look for other ways to save

In addition to planning early and budgeting, consider taking advantage of credit card miles and cashback opportunities if you have them. For instance, you can collect miles throughout the year and use them for travel during the holidays. Or you can also plan to put big purchases on a card with rewards to get the most out of cashback opportunities.

These may be good options for those with both good credit and consistent cash flow to begin with. It is also important to weigh the options of miles or cashback rewards against any potential interest or annual fees and see what makes the most sense for your situation.

If you need help planning your holiday budget or sinking fund, consider talking to a financial advisor who can go over options that fit your circumstances.