Is it too late to save for Christmas?

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With Christmas just nine weeks away—yes, nine!—it may be time to start thinking about how you’re actually going to pay for Christmas. It’s estimated that families across America spend an additional $750 over the holiday season. That’s a nice lump of change for most people.

Last year, my husband and I found ourselves with no safety net when the holidays arrived. While November happened to be a three-paycheck month for us and we were able to use that extra paycheck to tide us over, the reality was we still started off the New Year in the red.

So we vowed we would be better prepared this year. Beginning in February—after we had paid off Holiday Season 2012—we placed $50 from every paycheck into a Christmas Savings account through Capital One 360, which is an online savings account. Having an online savings account is beneficial for two reasons 1) the interest rate is generally higher than a brick and mortar bank and 2) it makes accessing the money a little trickier since you need to wait a couple of days for the transaction to go through.

Once we reached the $800 mark (about the middle of the summer), we stopped contributing toward Christmas. We figured $800 would be adequate, but then I thought about all the “extra” shopping I do around the holidays. For example, my shopping game plan is: “One gift for you, one gift for me. One gift for mom, one gift for me…” And the list goes on…

So we started contributing again and hope that we’ll have an extra cushion of $1,000 to tide us over this holiday season. We like to go big around the holidays…

If you haven’t come up with a game plan, don’t sweat it. There are still ample ways to save for the holiday season in the next nine weeks.

Tips for Saving for Christmas

  • Start a savings account now. Chances are you still have about four paychecks until you need to start buying gifts. If you can scrape $100 from each check—or any amount you can—you’ll have about $400. The trick is to put the money away as soon as you get your check, and pretend you already spent it on gifts, because if you wait until after you pay all your bills, and did the grocery shopping and got the gas, and went out to dinner, chances are you won’t have anything left to save.
  • Reduce expenses by 10%. Do everything in your power to cut all your non-fixed expenses by 10%. Eat more beans and pasta and less meat in order to reduce your grocery budget by 10%. Carpool a few days a week, or do your errands all at once in order to reduce your gas expenses. If you can reduce expenses by 10% and contribute that toward the holiday season, you’ll be ahead of the game.
  • Cash in on your rewards. Do you have any credit card points you’ve been hoarding? Now’s the perfect time to cash them in for gift cards to either buy gifts, or to give as gifts themselves.
  • Contribute $5 a day. If the thought of socking away $100 a week, or a paycheck is too painful for you, then start with $5 a day. Most of us spend a random $5 a day on any given thing, such as coffee or going out to lunch. Stop that frivolous spending and instead contribute $5 every day into your Christmas Savings jar or fund. In many cases, it’s a lot easier to let go of $5 a day than $150 a month, even though they both equal the same thing.