Why think about Christmas in July? Because it’s not enough to wish away debt. You have to start stashing cash in your stocking now. Here are 6 quick and easy ways to start saving for a debt-free Christmas.

I know, I know, Christmas is months away. Exactly half a year away, in fact. So, why are we talking about it right now?

Well, it’s because way too many Americans go into massive amounts of debt for the holidays–precisely because they don’t start thinking about them now.

Not convinced that you need to start thinking about St. Nick when you haven’t even gone on your summer vacation? One post-holiday debt survey showed Americans added an average of $1,054 in debt over the 2017 holiday season. Some of that comes down to sheer volume of spending, of course. The National Retail Federation saw a 5.5 percent increase in holiday spending in 2017 compared to the year before. In fact, November and December sales last year totaled more than $691 billion.

Sure, $1,000 may seem like a reasonable amount of debt to deal with, especially if you don’t carry a lot of debt otherwise. But with interest rates increasing, that balance could cost you a ton of money until you get it paid off.

Besides, why add any debt if you don’t have to?

Luckily, you don’t have to go into credit card debt over the holidays this year. At least, not if you implement a few of these easy, sneaky ways to start your Christmas saving plans right now.

Implement Automatic Transfers

Automating your savings brings a little Christmas magic to your savings account. Set up a standard transfer to your savings account on payday. The money will come out of your account before you’re even aware it’s there. It’s a painless way to save.

There’s no time to spend it frivolously, you don’t account for it in your play money, and you can’t talk yourself into using it toward some other expense. It’s out of sight, out of mind.

There are three keys to making an automatic transfer like this work.

• Set a savings goal. Look ahead now to the holidays, and decide how much you want to have saved by then. Divide that amount out monthly (by 6, if you start now), and transfer that amount to your savings account each month.
• Earmark the money. Make sure your holiday savings don’t get mixed in with general purpose savings. One way to do this is to use a separate free checking or savings account, either at your own bank or at a different bank. That way it doesn’t get mixed in with other money and “accidentally” spent on other things.
• Take out money as it comes in. The easiest way to automate this savings is to have it split off on payday. You can often do this through your employer, splitting your automatic deposit between two or three accounts. But the less time you have to spend the money after it hits your account, the better.

The easiest option here is to open a free savings account where you can hold the cash until it’s time to shop. You could also earmark it in your budget if you’re a strict budgeter, or use a bank account that allows you to separate money for specific purposes within the same account if you’re not. (These are often referred to as sub-accounts. Many banks, such as USAA and Capital One 360, allow you to add a number of these for free.)

Join a Christmas Club

Another option is to join a Christmas Club. Some workplaces still offer these options, so see if it’s available to you.

Basically, they set aside a portion of each of your paychecks. That money either goes into an account you can access or comes to you in the form of an extra check come November or December. It’s a sort of forced savings that you may need to sign up for during your annual enrollment period.

If your employer doesn’t offer a Christmas Club option, look into local credit unions that do.

These accounts can operate similarly to an automated savings account. It’s simply a dedicated (and, ideally, free) savings account, which is funded by regular automatic transfers.

By the end of the year, you could have a tidy sum saved up for holiday shopping.

Don’t Claim Those Reimbursements

Do you have a dependent-care FSA or an HSA, through your employer or healthcare plan?

Unless your account gives you a dedicated debit card to use for qualified expenses, you likely have to apply for reimbursements.

Usually, the rule is that you have to apply for those reimbursements by the end of the year. You don’t necessarily need to submit receipts before then, though.

For instance, I am maxing out my dependent-care FSA benefits this year (because two kids in full-time care is no joke, people!). The $5,000 limit over the year amounts to $416 and some change each month. While I can apply for reimbursement once a month when I get paid, I don’t have to do so.

Instead, I could hold back on just two months’ worth of reimbursement. Then, I can claim them in mid-November, and the reimbursement would more than cover my holiday shopping needs.

If you have a similar reimbursement account, you may be able to do the same thing.

Just be sure you check your company’s HR policies. My job also reimburses part of my cell phone expenses each month. And I can tell you that our controller would not be happy if I turned in twelve months’ worth of receipts on December 1st.

Even if you do need or decide to have these expenses reimbursed throughout the year, you can always throw this money into a separate savings account. That way you make your human resources department happy but still meet the goal of earmarking this money for the holidays.

Start Stockpiling Gifts

This option doesn’t really save money for the holidays. It has the same effect, though, in that you’ll spend less during holiday shopping season. Plus, if you start shopping for gifts well ahead of time, you may find much cheaper gifts and be able to capitalize on sales or coupons.

This is especially true if you’re willing to buy some gifts as high-quality secondhand items. Thrift shopping, garage sale hunting, and trawling eBay are all great ways to find interesting, unique gifts for less. The problem is that you need more time when shopping this way, so you have to start much earlier.

This is also the case if you like to hand-make holiday gifts. Starting now gives you more time to craft high-quality gifts that your friends and family will love. Since you have plenty of time, you can wait until any necessary materials go on sale at your local craft store to net even more savings.

Combine this option with an automated savings option, and you’ll have money available to spend on holiday gifts when you stumble upon them or have time to create. The only question that remains is where to store all those gifts in the meantime!

Choose the Right Credit Card

If you aren’t already using a good cash back credit card for your everyday spending, you’re missing out. The right credit card could net you hundreds of dollars in cash back over the course of a year. The key, though, is to choose the card that works best for you.

How do you choose the best card for your needs? Take these steps:

• Assess your spending. Check out your spending patterns from the last few months. How much do you spend at gas stations, grocery stores, big box stores, and restaurants?

• Find the card with the best rewards. If you spend way more on gas than anything else because of your high-travel job, choose a card that favors gas station spending. If you drop hundreds a week at the grocery store to feed your ravenous teenagers, grocery rewards are where it’s at.
• Make sure your credit will get you the card before you apply. Be sure that you check your credit score before you apply for a new credit card. Then use a site like Credit Karma to see if you are likely to apply for the rewards card you’ve chosen. If not, choose one with lower rewards but a lower credit limit. A high-rewards card does you no good if you don’t qualify for it!

Once you have a credit card you like, don’t use it to go into more debt. Instead, track your spending carefully, and pay off the balance in full each month. But don’t cash in on the rewards until it’s time to go holiday shopping. You might be surprised at how much you can earn this way!

Take Time to Make a Budget

I already mentioned this in a section above, but I can’t stress it enough. All of this holiday savings will be for naught if you can’t make and stick to a budget. Now is actually an excellent time to start thinking about what you want to purchase for the holidays and how much it’s all going to cost. You can see if your gift list is getting too spendy and cut back early, or see if you have more room to spend.

One of the ways I start making a tentative holiday budget is by keeping a running Amazon list for both of my kids. They both have fall birthdays, so some of those gifts go for their birthdays. But having that list available lets me see how much I’m thinking about spending well ahead of time. That way I don’t buy a couple of big gifts and then run out of budget for stocking stuffers.

The bonus to this long-term gift-planning strategy? When grandparents and others ask for birthday and holiday gift ideas, I always have some ready to go!

Saving ahead for the holidays isn’t as difficult if you get started early. If you’re already saving for the holidays, let us know in the comments how you’re making it happen.

Topics: Budget

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