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How Can I Set Money Aside for Christmas?

Ho-ho-HOW many dollars will you need this December?

If your post-holiday credit limit is stretched as tightly as Santa’s waistband on December 26th, then today’s post will probably be about as popular as finding a lump of coal in your stocking. But read up! By this time, next year, you could be a happy, Christmas-debt-free budgeter!

January, the First Month of Christmas

So, look. I know this is obnoxious, like when stores put up Christmas decorations before Halloween. Or the whole 'Christmas in July' thing. Ugh! I like my holidays to stay in their own lane—to sparkle on the date that they were intended, thank you very much.

But that sparkle? Well, anyone who’s watched a claymation holiday movie knows that it takes a legion of elves (and a payday or two!) to pull off all of the Christmas magic. So get started, now, by answering a few questions:

  1. How much did you spend on Christmas last year? Include gifts, decorations and festivities. Tally it up the best you can, while it’s still relatively fresh in your memory. Consult your budget, your December bank statement, and last month’s calendar.
  2. Consider any changes for Christmas this year—maybe the guest list will grow?—and adjust your figure. Best-guessing is allowed, as are margins of error. Now, what’s that number?
  3. Divide your number by eleven (or twelve, if you can begin seeding your ‘Christmas’ category before January ends). Got it?

That’s your monthly deposit to the North Pole. If it’s too steep, consider the big picture. Where can you cut a few red and green corners? (For one YNABer’s budget-friendly holiday tradition, see Tip #8 in this blog post.) Now set up a target in YNAB.

But What If You Haven't Even Paid off Last Christmas, Yet?

If you’re still wrangling with Christmas Debt, last year's edition, you’re in good company. And twelve months of payments towards next Christmas may seem ridiculous. It feels logical to pay off the debt you have before you plan for the next celebration, right?

Sorry, sugarplum, that’s not the best budgeting strategy. Even if you’re buried under six feet of financial snow (read: debt), you still need to plan for your true expenses! See YNAB’s Rule Two.

Essentially, if you’re not setting aside money for expected purchases, you’ll have a really hard time giving yourself the ultimate gift: freedom from debt! Saving (in this case, for anticipated holiday festivities) is part of a smart debt-repayment strategy. Of course, it would be wise to trim your spending, along with your tree, until you are debt-free. Let's not lose sight of our true priorities.

Get on the 'Nice' List

Just like with advent calendars, little by little, you’ll (yule?) work up to the big (shopping) day—adding cash to your stash in each of the coming months. And you’ll be so happy you did, because ...

Small Seeds Grow Ten-Foot (Christmas) Trees

You don't have to be perfect. Some months you might not have enough to meet your monthly funding goal. Other times, you’ll have a little extra to toss into the Christmas kitty. But every dollar adds up. When December comes, wouldn’t you rather have some money set aside, rather than none? Thought so.

Bonus: saving now also gives you the flexibility to pounce on a good sale if the perfect present for a special someone gets a markdown.

Reduce Holiday Bloating

Next year, when the season arrives—bringing with it more loved ones, more food, more packages … more, everything—leave your credit card balance out of the fun. That’s right! Get Grinchy with your creditors. No more credit card purchases, and no more interest payments. And, no discomfort from an expanding balance!

Enjoy Guilt-Free Christmas Goodness

While budgeting can’t erase the calories from eggnog or sugar cookies, it can make other holiday traditions—like travel, shopping for gifts, entertaining, sparkly decor and, yes, even Christmas jammies—100 percent guilt-free!

Plan wisely, starting now, and you’ll enjoy your next holiday season more than you can possibly imagine. When you find yourself pulling out your wallet for a mug of hot apple cider or a carriage ride (or whatever floats your Christmas boat), you’ll truly enjoy the occasion—and that’s the stuff great memories are made of.

Budgeting: a Winning Tradition

Are you ready to make this Christmas the best one, yet? Great! Go add a ‘Christmas/Santa/North Pole’ category to your budget, and start putting dollars there every payday. And start now—Christmas will be here before you know it!

If you’d like a little guidance about how to get started, drop into our free online workshops. Our teachers will be glad to answer all of your questions.

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How Can I Set Money Aside for Christmas?