My holiday season starts in October around Halloween.
Gift-giving is something that we value in our home along with hosting our friends and family.
We also have a lot of birthdays around the holiday season in our extended family so those are more gifts we have to plan for.
In past years, I had winged it and just saw how it went and it was always a disaster. The stress made our home unpleasant. There was a lot of tension in the air. Last year, I had a small amount saved and I ran out of money before we got to December. What I did differently last year was to begin tracking my holiday spending and estimating how much I would need to have saved to be able to do the things that bring us the most joy in the holiday season.
The goal is to not have to dig into our emergency fund because Christmas is not an emergency. Also, we do not want to carry credit card balances into next year because of holiday spending. That is the worst possible way to start the new year.
To get better at planning for the holiday’s we had to do 3 things; communicate, plan and implement.
- A Sinking Fund
- Secret Santa
- Keep gift prices reasonable. Nothing over $100.
The implementation of these three things for both my husband’s family and mine has made things more reasonable.
The sinking fund is housed in our High Yield Savings Account. We have a bucket for it under our emergency fund. We deposit money into this fund every month of the year.
In order to know how much to deposit monthly, first, figure out how much you believe you need for the holiday season. If you did not track this year then just give your best estimate. Divide that number by 12 and there you go. Create your sinking fund in a high yield savings account and set up automatic payments. This is the most important step out of the three so do not skip this one.
We communicated to our families that we love gift giving, however, it is not financially possible for us to get gifts for so many people each year. We asked if we could do Secret Santa instead. Both families said yes. Our budget is $50 for our secret santa. Each person now gets something that they really want.
Big gifts are reserved for birthdays, but even those are kept to under $200 for our kids and $50 for others. We do go over occasionally if there is a specific need or circumstance. Our rule is that if our kids want something that costs over $100 they need to save up for half of the final cost. This is how we are starting to teach financial literacy in our home.
There are no rules for my holiday sinking fund except to use it between October – December 31. I use it for Halloween pumpkin carving activities with friends. Cool Halloween treat bags for my kids, close friends and neighbors. Potluck items for Thanksgiving and Christmas. Treating friends to dinner at our home or theirs, and all gifts that fall in between these months.
This is the first holiday season where I feel rich (I’m not). I splurged on desserts for Thanksgiving and was so happy to see how much our families enjoyed them. We did pumpkin carving with friends. We bought the Christmas tree that we wanted, not the cheapest one at Costco.
It feels good to have this money set aside for this time of the year. The holidays are meant to be fun and special. It won’t happen magically. Be intentional about making it stress-free. What causes your holiday’s to be stressful? Make a plan to eliminate that stressor. Even if it means something that is not money-related, but instead people-related.