Now that Labor Day weekend has come and gone that means the holidays will be here before we know it. Well, we might have a few more weeks until they’re here but we need to start preparing our bank accounts now.
The holidays can be expensive, between gifts, outfits for all of the parties, the food we need to make or prepare to bring, and more. The monetary burden can quickly stack up. And after the holiday rush I always hear the common theme of “this year I want to prioritize my finances”. But it’s hard to start out on the right foot when you are saddled with debt and bills from holiday spending.
Today let’s talk about one of my favorite ways to financially prepare for the holidays
Open an account specifically earmarked for holiday expenses. From now until Black Friday (or even the end of the year) I want you to contribute the same amount into that account each pay period. I also want you to AUTOMATE it. This will help you to avoid the excuses of “forgetting” or “accidentally” spending those funds on something else.
I already know your next question is going to be ‘how much should I be putting into this account each week’? There’s two main ways you can determine this amount. You can dig out last year’s credit card or bank statements and figure out how much extra spending occurred from mid-November through the end of the year.
Another option is to create a budget for yourself. How much are you will to spend on a certain person, activity, or event? You can also search online for bigger ticket items you might be purchasing and how much you would be willing to spend on that item if it goes on sale.
Once you determine how much you will need, head over to your calendar and figure out how many pay periods you want to contribute to this account. Don’t forget to head over to your payroll provider and make sure you automate your deposits into this account. Additionally, you may want to set a calendar reminder to end the automatic deposits at the start of the New Year.
Remember that the goal of this is to relieve your financial burdens when the holidays roll around. If you end up having extra in the account you can leave the funds in there for birthday gifts or other holidays during the year. As each year passes you will become more accustomed to relying on and planning to have this account.
Pro Tip: Each year try to start funding this account earlier and earlier. This will help to relieve the stress of putting large lump sums in later in the year.