Updated: September 11, 2023
This article is also a Reblog episode. Click play to listen to it instead:
The “ber” months are here, meaning Christmas is just a few months away.
Aside from keeping an eye out for upcoming Christmas bazaars in your area, it’s also crucial that you start saving for the expected increase in your spending.
While employees can always use their bonuses and 13th-month pay to cover the holiday expenses, I think it’s better to use that extra money to pay for debts or buy an investment.
Moreover, freelancers and business owners like me have the “unfortunate luck” of giving away Christmas bonuses instead of receiving them. This makes it very important for us to plan our finances for the approaching holidays.
Traditionally, freelance projects and business sales significantly grow during the holidays. However, one cannot solely rely on the profit for increased sales to cover the holiday spending.
This brings us to the point of this article – to start saving for a “holiday fund.”
But how do you do it? Below are some very simple steps.
List down the people you will give gifts to.
As early as now, have a list of people you’ll most likely give presents to. Be generous and include everyone you want. Once done, you can try to sort your list and group them according to their importance to you – which usually dictates the budget for their gifts.
Anticipate the parties and the gifts you’d have to bring.
Exchanging gifts is a common practice at Christmas parties. Count how many parties you’ll most likely attend that would require a gift – then estimate the probable value needed for the present.
Make a budget for a gift to yourself.
Reward yourself for all your hard work the whole year, and make an achievable budget for your personal gift. It’s better if you already know what you want – that way, you can start looking where you can buy it the cheapest.
Sum it up to estimate how much you’ll need to save.
Now that you know how much you’ll need for the holidays. Divide it by 16, and that’s how much you need to save each week to achieve your goal. Why 16? That’s the number of Saturdays left before Christmas starting from the first week of September.
Here’s a sample worksheet that I made that shows you what you’ll holiday budget summary might look like:
In the example above, saving P500 a week seems achievable, don’t you think? If not, you should adjust your budget accordingly until it becomes acceptable.
Of course, this is just a simplified example; there are other expenses not considered, like food for potluck parties, Christmas home decor, and a possible increase in electric bills. If you can, do include them in your budget plan.
This exercise’s main point is to help you have a clear view of your expected spending this coming holiday season. The earlier you know, the more time you’ll have to plan financially.
And more importantly, learn to commit to your budget and holiday spending plan – isn’t it time for you to start this New Year without debts and with extra money in your pocket?
You know you’ve got your financial act together if you spend the same percentage of your income between Thanksgiving and New Year’s as you do between New Year’s and Thanksgiving.
– Jonathan Pond, American Financial Planner