Saving for the Holiday: No Time Like the Present!

By Andia Dinesen AFC ® - Vice President, Association of Military Banks of America

When planning for the expense of the holiday season, it seems like I always spend more then I planned to because I forget about the little costs that add up. Especially when it comes to my sister, I like to shop in person and buy gifts for her that I can see and touch.  There is nothing like the shock of piling up the gifts (I just had to get her) and then realizing that those objects have to go to overseas!  Luckily she has an APO address, but really, sending her three flat-rate boxes is an expense that I forget to account for… every year!  Then there are other state-side relatives, friends, etc.  Every year these gifts go out the door and I forget that it will be another $100+ of shipping costs.  Sometimes I am lucky and what I want to get for them I can get online and take advantage of some holiday sales or at least free shipping.

So what is my point of all of this?  I like to complain?  No, not really; ok- sometimes.  But, what I am trying to get at is that the holiday seasons seems to be the time of year I am most likely to throw a purchase on my credit card and I am not the only one.  According to Consumer Reports in 2011, holiday shoppers planned to put 53% of their purchases on a credit card. Another survey found that shoppers planned to spend an average of $646 on purchases this holiday season.  That amount of spending and corresponding credit debt can be a recipe for disaster and not a great way to begin the New Year.

So here’s my solution.  If you haven’t guessed it, it is automatic savings!  Transform the Military Saves Week theme into a year-long-all-savings-habit.

  • Set a Goal: How much do you plan to spend this holiday season?  Try to remember all those little things that may add up; things like extra groceries for holiday baking and cooking.
  • Make a Plan: Count backwards and decide what you will need to save each month (or pay period) to reach your goal.  Do you want your holiday cash to be available in October, November, or December?
  • Save Automatically: Use an allotment or have a transfer set up to a savings account for the amount and time you determined.

Here’s what my spouse and I do.

  • Set a Goal: We sat down and wrote down our goal for our holiday spending.  This year we chose to have saved $1,000 by October 1st.
  • Make a Plan: January - October on the 1st of each month we have an automatic withdrawal of $100 go into a savings account; our “Holiday Savings” account.
  • Save Automatically: We set it and forget it.

Now, to be honest, we haven’t always saved this much or been this organized.  It has come with time, mistakes, and trial and error.  Just two years ago we began saving as early as July and we were able to scrounge a little and cut-back at the holidays to stay within our budget.  It felt great not to pull out a credit card all holiday season.

Join the 47% of Americans that pay cash for their holiday shopping - Set a Goal, Make a Plan, and Save Automatically. By saving for the holidays now, you can keep that credit card in your wallet and make sure to there won’t be any holiday hangover.  Now that’s what I call an early present!     

Tip of the Day

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