‘Tis the Season to Start a 12-Week Christmas Savings Plan

A couple get excited over Christmas shopping.
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Don’t you want to scream when you see Christmas displays in the stores before Halloween? Or when “It’s Beginning to Look a Lot Like Christmas” is stuck in your head for two months because it starts playing in early November?

The Christmas creep can be annoying, but there’s at least one good reason to start thinking about the holidays before the leaves start changing color: It gives you more time to save.

Given the current trajectory for holiday spending, you’re going to need that secret savings stash. The National Retail Federation found holiday spending rose 14.1% in 2021 with US consumers forking over a whopping $886 billion to spread a little holiday cheer.

Waiting until November or December to prepare for these expenses means you’ll often end up charging your purchases and paying them off — plus interest — well into the new year. Instead, establish a Christmas savings plan now to avoid debt and overspending.

A graphic that shows how much money you should put away in a period of twelve weeks that depends on how much money you want to spend for your Christmas fund.6 Steps to Creating Your Christmas Savings Plan

Not sure how to squirrel away extra funds for the holidays? Here are six easy steps to get you started.

Step 1: Start With the End in Mind

To save enough money to cover all your holiday expenses, figure out how much you plan to spend and divide that by the number of weeks you have until it’s time to start shopping. That will tell you how much money you need to save per week to build up your Christmas fund. In the personal finance sphere, we call this setting up a sinking fund.

Step 2: Make a Gift List

To estimate your overall savings goal, first make a list that includes who you’ll be shopping for and how much you’ll spend on each person. It may be helpful to refer to what you spent last year. Or you could research the prices of items you plan to purchase for each person and total them up.

Step 3: Check it Twice

Heads up: Your Christmas savings plan needs to cover more than gifts. So add estimated costs for decorations, food and holiday events to your shopping list. Between special events where you contribute a bottle of wine, gifts for your kids’ friends or an office Secret Santa, plus the bounty of food on the actual holiday, these “extras” can really add up.

How much should you budget for seasonal extras? The average cost of wine varies state to state but ranges from $10-$15 a bottle. And if you want to bring a baker’s dozen to the holiday party, Hello Fresh’s 2021 Christmas Cookie Price Index reveals ingredients will cost you around $6.10 per batch.

Step 4: Do the Math

Total everything and divide it by the amount of weeks left until you’ll hit the stores. Unless you’re a fan of last-minute shopping, this means giving yourself some wiggle room before December 25.

To make things easier, we’ve laid out how much you need to save per week over a 12-week period to come up with anywhere from $200 to $1,000 in extra money for the holiday season. Statista indicates the average U.S. consumer spent about $886 dollars on Christmas gifts during the 2021 holiday season.

If your Christmas budget is $450, you’ll need to save $38 per week for 12 weeks. If you want to save $800 to meet your Christmas savings plan goals, you’ve got to put aside $67 per week for 12 weeks.

Step 5: Consider Setting Limits

Another tactic for holiday saving is to determine how much money you’re able to save and create your holiday budget based on that. For example, if you’re only able to save $25 a week to go toward your Christmas savings, you’d save $300 in 12 weeks. That would be your limit for all your holiday spending.

If you think you’ll need more money to pay for all your Christmas expenses and still emerge debt free, you’ll need to start saving earlier so you have more weeks to save up. In fact, you can implement your Christmas saving plan anytime during the year.

Step 6: Keep Holiday Savings Separate

As you start saving for Christmas, it’s good to keep your holiday savings apart from the rest of your money so you don’t accidentally spend your stash on everyday expenses. If you use a sub-savings account at your bank or credit union, set up automatic savings transfers each week to ensure you stay consistent.

If you take the cash envelope route, make sure you have an envelope exclusively dedicated to holiday expenses and not other short-term goals. Set weekly calendar reminders to nudge you to put the money aside.

2 Tips to Help You Save Money for the Holiday Season

When saving money in the short term, there are two basic strategies to consider.

Strategy 1: Cut Expenses

Trimming the fat from your weekly spending is a good way to find extra cash to put toward Christmas gifts. Take out your budget and highlight all the nonessential recurring expenses. Identify a few — like fast food dining or trips to the nail salon — that you can give up until you’ve finished your holiday shopping.

If you want to increase your savings fast, try a no-spend challenge. Or cut your grocery budget by doing the pantry challenge and do meal planning with what’s already at home.

Strategy 2: Generate Extra Income

Saving money for the holiday season isn’t all about making cuts. You can temporarily increase your income by getting a part-time holiday gig (bonus if you get a company discount) or doing odd jobs on Fiverr or TaskRabbit. Or put your hobbies to work making and selling something cute and crafty on Etsy. And don’t forget to make room for the new gifts you’ll get by cleaning out your closets and selling stuff online.

How to Save Money on Gifts During the Holiday Shopping Season

In addition to a Christmas savings plan, you also need to set a Christmas budget that’s financially comfortable for you.

Here are seven ways to spend less this holiday season:

1. Make Your Own Gifts.

Get crafty and DIY some Christmas gifts for your friends and family.

Worried your homemade gift will seem kitschy? Try our 100 Holiday Gift Ideas That Won’t Cost You a Penny for affordable gifts your friends and family will cherish.

2. Shop Early and Take Advantage of Sales.

Rather than wait until you’ve reached your Christmas savings goal, you can use the money you’ve been saving up to buy gifts early whenever you catch something on sale. Bonus if you’ve saved any coupons.

Shopping early may be especially important this year as supply chain concerns continue. The adage “time is money” holds true during the holiday season when finding popular Christmas toys can be challenging.

3. Use Old Gift Cards.

It’s easy to forget about gift cards you’ve gotten long ago that still have a balance. Dig out your cards and check the balance. Buying presents with your gift cards will free up cash to use for something else.

Not finding the right gift to use your gift card balance? See our tips on the best sites to sell gift cards and turn that plastic into cash.

4. Cash in Your Credit Card Rewards.

If you get cash back or points for swiping your credit card, save those up in order to use them for your holiday spending. Just be responsible with your credit card so you can triumph in a debt-free Christmas.

See our recommendations for the best cash-back credit cards.

5. Implement the Four-Gift Rule.

Save money by restricting the amount of presents you give your kids. The four-gift rule focuses on getting each kid just four things: something they want, something they need, something to wear and something to read. Plus a little bonus from Santa, especially for the little ones.

Read more about the four-gift rule here.

6. Comparison Shop Online.

Do your holiday shopping online and compare prices to get the best deal. Some browser extensions will even do the work of saving for you. Be aware of shipping costs when shopping online. These stores offer free shipping with no minimum order.

7. Set Your Calendar for Sales.

It’s easy to browse and then forget to circle back for the sale. Set up appointments on your calendar to remind you when holiday sale prices kick in, especially for big-ticket items like electronics.

Not all holiday sales are created equal. Use our guide to the best time to buy everything to snag the best deals before Cyber Monday or Black Friday.

Kaz Weida is a senior writer at The Penny Hoarder. Nicole Dow is a former senior writer.


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