Holiday Saving Tips: How to Grow Your Christmas Nest Egg

Autumn is here and the leaves are just starting to turn. Believe it or not, that means it's time to start thinking about the holiday season. Holiday expenses can pile up quickly. Planning ahead saves you sticker shock and can spare you a steep credit card bill in the new year.

Careful planners have laid out their holiday budget well in advance and saved for it all year long. It's not like the holiday season is a surprise, after all! A generation ago, it was common for housewives to be part of a “Christmas club” at their local bank, which was just a targeted savings account where you saved a little cash each week and got it back in a lump sum before the holidays.

But what if you haven't laid aside a nice nest egg for holiday shopping, travel and entertaining? Well, it's never too late to start. Getting on the holiday savings bandwagon now will help you create a buffer between you and all those extra bills.

How can you do it?

Begin with a budget
1980 Gates Christmas - Tiff and KrisStart with a budget of expected expenses. You probably know at least roughly what you spend year to year. If you've been tracking your spending, you can even look back at the past few Decembers and get a more detailed feel for what your expenses have been.

Don't just look at what you spend at the mall. Gifts are probably a big chunk of your holiday budget, but they're not everything. You also need to consider added costs for food and drink if you entertain during the holidays. Travel costs are a factor if you visit relatives, whether it's a road trip to Grandma's or an international flight.

Then there are all the little expenses:

  • The gifts for your child's classroom teacher, and the secretary at your office.
  • Yankee swap (or white elephant) items.
  • A bottle of wine for the hostess at each of the four holiday parties you attend.
  • A dress for New Year's Eve — and new shoes to go with it.

Once you've looked over your expense records for last year (or wracked your memory if you've just gotten on the personal finance bandwagon and don't have last year's records), it's time to sketch out a budget. I like to be specific in my holiday budgeting. I make a “Santa's list” of gifts I expect to buy. I jot down rough expenses for the annual holiday party I host: how much I expect to spend on booze, food and sundry party supplies. I budget out any trips we're going to take, like visiting my father for Thanksgiving.

This may sound tedious, but I find it really fun. In general I use more detailed budgeting than J.D. does, so I may be predisposed to finely tuning things. If you prefer a looser method, you need only figure out how much your total spending from, say, mid-November through New Year's exceeded your regular monthly spending. That's how much extra cash you'll need to cover your holiday expenses.

If you're like me, you probably want to take a more detailed approach. In the case of my holiday budget, it's not a chore at all. It's sort of an anticipatory activity. I sit down with my husband and plan out what we want to do for the kids this year. I get to imagine how my party will be, and think about what kinds of food and drink I'll serve. Checking on airfares to Tucson is a chance to think about the Thanksgiving meal I'll share with my father, and how happy he'll be playing with my kids. I'm looking ahead to the things I enjoy about the holiday season, while I'm figuring out what each one will cost me. It helps me keep my expectations realistic, and gives me a chance to savor the time with friends and family that I'm looking forward to.

Starting to save
Once you've figured out your budget, in whatever level of detail is comfortable for you, it's time to save that money.

Money doesn't come from nowhere. To save up a chunk of cash over a few months, you'll probably want to employ several strategies.

  • The first thing you can do is cut back on your discretionary spending. Stop eating out, scale back on entertainment. Stay in with Netflix and a good homemade meal a few times, and you'll save a decent chunk of cash. Taking a close look at your spending habits will probably highlight some other things you can cut back on: shopping, subscriptions, travel. The usual suspects. If you've been managing your finances closely for even a little while, you probably have a good idea of what your personal money sinks are. You know what can be cut for a short period of belt-tightening. Now is the time to do it if you want to splurge over the holiday season.
  • Once you've cut back your discretionary spending, look at ways to bring in more cash. Some people pick up part-time jobs around this time of year: plenty of places need seasonal workers, from stores at the mall to apple orchards. You can easily pick up a short-term gig doing something that may not thrill your soul, but will put extra cash in your pocket.
  • Alternately, you can look at earning money from a hobby or talent. Maybe you can schedule some portrait sessions, or make some money busking in the subway. You might be able to hang out your shingle doing some bike repair or odd jobs around people's homes. Craft fairs and shops offer opportunities for knitters and crafters to sell their creations. Putting in some extra hours and effort with your creative work this season might well pay off in extra fun money right when you need it.
  • Finally, you can sell stuff. Possibly even some of last year's Christmas presents. You surely have old DVDs, sports equipment or other useful things in good condition that you are never going to use again. Selling your unwanted goodies is a bit of an art. Some people, like J.D., are great at it. Others find it's more of a hassle than a lucrative hobby.

However you decide to approach saving for the holidays, have fun with it. Not only is it a good idea to put by some extra money for the upcoming season, but it'll give you good practice at setting a financial goal and meeting it.

Note: Another way to help your Christmas budget? Don't forget to explore homemade gifts. These can save you money and be fun to make.

More about...Budgeting, Planning

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Tanya
Tanya
8 years ago

Now is also a good time to start planning if you want to make gifts. For example, homemade cookie mixes, bread mixes, etc. can be ideal teachers’ gifts, hostess gifts, etc. You can start budgeting for them now and start stocking up on ingredients you might need, such as chocolate chips, nuts, spices, etc., so you have them when you’re ready to prepare them.

Jynet
Jynet
8 years ago
Reply to  Tanya

The problem there is that a lot of that goes on sale around Christmas (sometimes Thanksgiving), so it is cheaper to buy it closer to the day.

But budgetting for the baking too is a good point. I made 400 cookies last year… that is a LOT of flour!

Andy
Andy
8 years ago
Reply to  Jynet

400 cookies!?!?! That is so impressive. I will be in awe the rest of the day 🙂

Leah
Leah
8 years ago
Reply to  Jynet

Interesting thing about flour though. Sometimes, it seems like a lot but isn’t so much when you sit down and add it up. I’m not sure about your cookies, but I do know about cupcakes. I made 180 cupcakes for a friend’s wedding this summer (at my mom’s house, because I live across the country from where I grew up). I bought all sorts of extra supplies, just in case, so I wouldn’t have to run out while baking. I ended up using less than a bag of flour for all those cupcakes, and I was pretty shocked at how… Read more »

cc
cc
8 years ago
Reply to  Leah

butter and eggs can kill your savings though- i always forget about them. heaven forbid you make a bad batch- i ended up spending a pretty penny on a batch of cookies after i completely wrecked the batter the first time around and had to make it all over again.

Jynet
Jynet
8 years ago
Reply to  Leah

I agree and the baking went over really well as gifts too.

The flour did last longer than I thought but a lot of the other ingredients did add up.

And I bought cheap but pretty bowls from the dollar store and lined them with tissue and cellophane. Wrapped the whole thing in cellophane and ribbon.

It worked great, but was time consumming and not as inexpensive as I thought it would be.

christine
christine
8 years ago

I budget all year long for holiday gifts. It’s a part of my monthly spending/saving plan. I also shop and buy holiday gifts all year long as well. I buy alot of items on clearence after the holidays are over. My MIL loves Santas so I pick up a really nice one each January to give to her the next Christmas. My favorite discounted gift this year is for my sister. She’s geting a lovely scarf and gloves that originally where very expensive but purchased on clearence in February were very reasonable.

Jen
Jen
8 years ago

This year, I’m also going to remember to cross-check my list with the $50 for $40 offers that are on the Discover card site for buying with your rebated money. Then I can use my 1-5% rebate to buy 20% discounted gift cards to shop the sales.

I always remember that I *should* do this about December 15th when it’s a little late to implement!

Natalie @ Mango
Natalie @ Mango
8 years ago

Seeing as though it’s only the beginning of October, it does sound a little weird to be saying “last-minute” holiday savings… when we still have two months. That being said, you’re completely right! When you think about two months in terms of saving money for gifts– especially if they’re going to be BIG gifts– it isn’t much time at all! In addition to cutting back on costs, if you’re looking to earn some *extra* money for holiday spending this year, you might consider picking up a side hustle or small, side job. Two months might be kind of tight if… Read more »

J.D. Roth
J.D. Roth
8 years ago

Yeah, the “last-minute” thing kind of bugged me too. So, I’ve changed the title. Thanks!

Cole Brodine
Cole Brodine
8 years ago

My bank offers a holiday saving account. I have all my holiday expenses figured out, plus a little buffer. I then have that automatically taken out of every paycheck and deposited in my account. The holiday account plays interest on Oct 31st every year, and then transfers the entire balance to my checking account on Nov 1st automatically. It works great for me.

Decebal
Decebal
8 years ago

Our family saves $40 to $50 each month for X-mas, starting in January. We have an envelope maked Christmas, and each month we add the cash. By X-mas we have close to $600 in cash, which we could never cough up that much at once in December. We’ve done this for 5 years, and it’s been the best idea we had. Come January, I have a great big smile on my lips. No debt from the Holidays, the best present I give myself each year. BTW, some years, we even have money left over, or we splurge on something for… Read more »

@impulsesave
@impulsesave
8 years ago

It’s scary that this is all happening so soon, but if you want to be wise at the holidays, now is the time to start planning. Another advantage to start saving for the holidays: less shock come January when you open the bills! Thanks for reminding everyone 🙂

Amber
Amber
8 years ago

Now would not be too late to lay out your gift-exchange agreements with family & friends as well. E.g. we as a family are all adults and therefore should not be buying each other more than $25 worth of STUFF to give. We all love the gift exchange but in many years it gets out of hand with too many presents at too high a cost. Children are a different rule.

Becka
Becka
8 years ago

Oof. I’ve come to enjoy the holidays a lot more since I stopped buying gifts (and yes, I’m childless/free, so that makes it easier). I’m still glad to celebrate and spend time with family, but I find giving and receiving gifts a huge source of stress (especially receiving crappy gifts :-/ ) well beyond the financial implications. The few gifts I do give tend to be homemade foods. I do think it makes a lot more sense, as some others have said, to treat holiday spending as a monthly line item and save for it throughout the year, rather than… Read more »

Megan
Megan
8 years ago
Reply to  Becka

Bingo! (And I have kids!)

I have severely cut my list of gift recipients. We do small exchanges with family, and we’ve limited how much is spent on every recipient. It just gets too crazy. I don’t want to spend the weeks before Christmas running around the mall trying to find a gift for someone who already has a ton of Stuff.

Anne
Anne
8 years ago
Reply to  Becka

Ahhh yes, more from the childfree camp claiming children are some horrible burden. Buying for one’s own children doesn’t seem to be what breaks the bank for most people. Even five presents aren’t a horrible burden to those on a limited budget (but still have SOME disposable income to put towards presents). From what I see, what breaks the bank is buying the presents for aunts and uncles, gals at work, spouse, inlaws, parents, sisters, brothers, nieces and nephews, brother-in-law’s girlfriend etc…. etc…. There’s no reason a child should automatically get something his or her parents can’t afford. From what… Read more »

chacha1
chacha1
8 years ago
Reply to  Anne

Becka didn’t say children were a horrible burden. She said she found the obligatory gift process stressful.

Don’t put your words in other people’s keyboards.

Anne
Anne
8 years ago
Reply to  chacha1

Buying three presents is hardly stressful.

Jynet
Jynet
8 years ago

I’ve been trying for the last few years to get the family (now that the youngest grandchild is an adult) to move towards either “experience gifts” or donations in our names.

No luck so far – the hold out is my dad! But I HAVE got them to give specific lists of what they would like.

For the first time Dad actually did this, and I found EXACTLY (orchastra, conductor, date recorded, condition of the EP) the vinyl he wanted for 1/3 the price he found it at 🙂

A bit of advanced warning means I can ‘bargain shop’ 🙂

Harmony
Harmony
8 years ago

I think doing many targeted savings accounts ends up too complicated. It is easier to do one discrectionary account for all vacation/holiday/rainy days.

Emily
Emily
8 years ago

This year I’ve been focusing on planning ahead to enjoy the holiday season without spending so much money. Limiting my baking, going to less parties and not exchanging gifts are the obvious answers, but leave a hole. I’m co-doing a small gingerbread house with my sister in law in place of all my usual baking, so that should work out, but in leading discussions with my parents and siblings about not exchanging gifts this year (4 of the 5 of us have spent the majority of the year job hunting, and I know I just can’t come close to the… Read more »

Beth
Beth
8 years ago
Reply to  Emily

You should read “The Grinch who Stole Christmas” and remember that “Christmas doesn’t come from a store…” There are so many things you could do to enjoy family time and not spend any money or minimal money. Each person in your family could write down what they have appreciated about the others and read it on Christmas morning, you could all volunteer at a soup kitchen or shelter, attend a religious service, watch a movie, make a meal together, play games, take a winter walk somewhere, go to a zoo (sometimes these are open every day because they still have… Read more »

Emily
Emily
8 years ago
Reply to  Beth

My family generally spends 2-3 days together for the holidays, we do attend religious services, make many meals together, go for walks, and watch holiday movies. None of those things can be a replacement for sitting down together around the tree in our pajamas sharing in decades of family tradition. I’m thinking playing a board game may reproduce some of the ‘on the floor in pajamas acting like children’ feelings. But as a family we play boardgames year round. I’m not sure how to make it ‘christmas-y’ or really how to make anything ‘christmas-y’ that’s not already established tradition. This… Read more »

Anne
Anne
8 years ago
Reply to  Emily

I get what you’re saying since I love opening presents. (Even if we no longer give them.)How about a secret santa where you play a game of trying to guess who gave what to whom? Make it part of the game that you want it to be really hard to guess. Or a yankee swap. I love them. And they are cheap. You never know what everyone will want! Or you could think up a new tradition, like everyone brings supplies to decorate your gingerbread houses and you pick teams and compete with someone acting as the judge. The first… Read more »

Andrew
Andrew
8 years ago

I’m sorry, but I just can’t think about Christmas when even Halloween is still a full 4 weeks away. It’s too irritating.

The American commercial frenzy known as “the holidays” long ago ruined December and have started in on November. I refuse to let this nonsense poison October as well.

Meika
Meika
8 years ago
Reply to  Andrew

I’m not a fan of holiday creep, either, but this is a good reminder to prepare for a time of year that is very expensive for many of us. I do think there is a difference between setting up a fund for a planned significant expense and breaking out the Christmas music at first frost.

Leah
Leah
8 years ago
Reply to  Meika

My parents’ rule re: Christmas music is this:

No Christmas music allowed until you’re cleaning up after Thanksgiving dinner. This limits the crazy and helps us enjoy fall and the holiday season.

Jynet
Jynet
8 years ago
Reply to  Leah

I like that rule… But in Canada Thanksgiving is next Monday, lol… so … not much delay here.

I do try to wait until after Hallowe’en though!

cc
cc
8 years ago
Reply to  Andrew

this is the exact reason i’m doing my shopping now- trying to finish by my annual deadline of thanksgiving. i live in nyc, and going out is just prohibitive around the holidays, much less trying to go shopping. ideally i have everything purchased, shipped to me, wrapped and ready to go by the end of november. that leaves all of december to sit back and enjoy the rest of the holidays without frantically trolling etsy at the last minute paying $15 for rush shipping or buying an ugly $50 candle at the “holiday markets”. it’s awesome.

Stacie
Stacie
8 years ago

I think now is the perfect time to start thinking about holiday shopping (for those who haven’t already). This was a good reminder to me to create a savings goal in my account. Otherwise, I’ve been saving my credit card rewards. I will probably cash them in and use that to pay for the majority of my Christmas gifts this year.

Carol in Mpls
Carol in Mpls
8 years ago

Just have to say that Xmas shopping for me is always very easy, not expensive, and I never have to hit a mall (or the Mall of America, in my backyard). I go to local boutiques, gift shops, etc. and never fight for parking. I’ve often shopped on the 23rd, and found just what works. With a very small family, and no one that really needs anything, we go for something fun or unique, but not costly. My father is in assisted living and doesn’t need any dust-ables. My brother always flies, so his gift needs to fit in his… Read more »

Karen
Karen
8 years ago

I try to resist the idea of having/wanting to buy new holiday party clothes on top of other gifts. It’s not too difficult to jazz up basics with creative/festive accessories. Last year I solved this problem in a fun way. I found an incredible sparkly silver scarf at a vintage shop in downtown Portland that I couldn’t stop thinking about. I did not need it but I was in love…(ooo! a shiny). I bought it (a steal at only $10), wore it to my office holiday party with a dress I already had, then sent it to my sister as… Read more »

stellamarina
stellamarina
8 years ago

I have a gifts envelope that needs to be be refilled to get ready for xmas now that the grand-child birthday season is over. At our local credit union they have a santa account that is piggy backed on to your savings account. It gives 4% interest and the amount is always transferred into your main acount at the beginning of Oct. If you do not want it for xmas you can put the amount back into the Santa account for another year. $2500 max.

Michelle
Michelle
8 years ago

What a great post! I’m hoping my Christmas spending comes way under what I want it to be.

El Nerdo
El Nerdo
8 years ago

I don’t celebrate Christ’s Mass. If I spend money, it will be to fly South while everyone freezes in the Northern Hemisphere.

andrea
andrea
8 years ago

Wow, time is going by so fast the thought of the holidays has not even entered mind, but thanks for the tips, At least I’ll know what to do when I start saving.

Damian
Damian
8 years ago

For me, the best way to save money over the holidays is not to make a fuss over them. Cut back on gifts and commercialism. Is a new dress and shoes really needed? Holiday shopping? Do we looking for an excuse? If I have the means and inclination, I will buy a gift for someone else (or myself). But I resent the idea that an externally defined date, unrelated to my values, dictates that I should buy things. For me spending time with family over holidays (and vacation) is important, I budget for that. But, the rest has become too… Read more »

cc
cc
8 years ago
Reply to  Damian

thanks for the reminder. it is the ipod-and-giant-headphones shopping season.

sarah
sarah
8 years ago

I don’t spend a ton on gifts, but I do budget ahead for airfare starting in the summer. It seems we can never get by spending less than $1k on flights to go home.

Mom of five
Mom of five
8 years ago

This year we’re trying really hard not to go beyond our two main sources of Christmas present funding. The first source is our coin change which we save all year. I turn it into the coinstar in November and get an Amazon gift card, which is as good as cash to me. It’s normally around $600. Our second source is credit card points which really go quite far since we always spend a good deal at Gamestop – $80 Discover Cash translates into $100 at Gamestop. This April I got $500 cash back from Discover for spending $2000 each month… Read more »

J.D. Pohlman
J.D. Pohlman
8 years ago

I’m glad to hear someone else mentioning the fact that you should save up for holiday expenses all year long. I mentioned that on my blog too. You should always save up for known expenses, otherwise you’ll be in debt forever. Right now, you should be 3/4 of the way saved for Christmas.

cc
cc
8 years ago
Reply to  J.D. Pohlman

i always have christmas covered, but then valentine’s day is right around the corner and i forget every year. wham! gotta remember that this year, to leave some cash for feb!

fairy dust
fairy dust
8 years ago

I figure there *has* to be some silver lining to divorce when it comes to the holidays. So while I’m looking at pretty much being all alone for the first time ever in my life, I will not have the usual family expenses of the holidays past 🙂 And I will be playing whatever Christmas carols I want starting whenever I want.

Elayne
Elayne
8 years ago

I started xmas shopping in July. I didn’t make a budget but I know how many ppl I’m shopping for and what I can spend on each person. So I decided that I would buy one gift per pay period (twice a month). Of course I use coupons, discounts whatever and I’ve made out very well so far. And the most important thing I’m paying cash for everything.

Jackowick
Jackowick
8 years ago

You can never plan too early. I recently cashed in reward points for gift cards I can use for gifts. Remember though that your purchases have to post, then the points, then you redeem… don’t wait too long! Also, I am a huge fan of the Amazon trade-in program. Check out the CDs, DVDs, Books, Video Games, and you get a pre-paid postage label and a credit to your account. I find the values often are comprable to an ebay or reseller price, but it DOES vary from item to item. Another good benefit is that your money is only… Read more »

Heather
Heather
8 years ago

A couple years ago I was just coming off being unemployed, broke, and saving for a cross-country move. I decided I was making a hot cocoa basket for everyone. I intended to make my own mix, but time got away from me and I had to buy packets. I spent $74 and made gifts for 21 people. Everyone got a basket (couples got gifted in one basket), a mug, a decorative baggie full of cookies, a bag of marshmallows, and 3 packets of hot cocoa mix. The best part? It was the first Christmas that my mother wasn’t buying the… Read more »

Nate
Nate
8 years ago

A quick way to add $25 to your Xmas savings pot is to sign up with ING Direct. If you open an account with them and deposit at least $250 you will get a $25 bonus.

The catch is you need a referral link, but there are a bunch here: http://sicksaver.blogspot.com

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