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Tis the season to be jolly… tra-la-la-la, la-la-la-laaaaaaa! Ah, Christmas. The month when everyone is in a strangely good mood, smiles and laughter abound and generosity flows like the warm gluhwein itself. 

But all that Christmas cheer can soon be sucked out when you realise the dent a single month can have on your wallet. Only then do you wish you had started saving for the festive season much earlier.

What’s the Deal with December?
For some reason, we’ve packed in a lot of holidays and celebrations towards the end of the year. Thanksgiving. Black Friday. Hannukah. Christmas. New Year’s Day. This excludes the fact that many of us take a holiday around this time to spend it with family and friends. This often translates to elaborate parties, expensive dinners, alcohol overload, and, of course, gifts.

Tis the season to be splurging, it seems.

It’s no wonder it’s called “Debt December”. In order to afford the gifts, the food, the alcohol, and the traveling, we often have to rely on credit cards to get us through.

But why do we place so much emphasis on spending around Christmas? Maybe it’s the one time in the year when you feel it’s okay to shower love and gifts over your family? Or maybe you feel the pressure to buy the “best gift” or “most expensive gift” or “most memorable gift”? Maybe you’re just keeping up with the Joneses next door – trying to out–compete them?

Whatever the reason, we need to stop and ask: is it worth it to travel to the brink of financial ruin to impress our families? Is entering the new year in debt the clean slate you were hoping for? And, really, do you think your family wants to see you struggle financially all in the hopes of receiving a gift?

Now now – I’m not trying to be the grinch who stole the joy of Christmas. I love the festive season as much as anyone else. But there are better ways to prepare and pay for your festivities.

Start a Festive Season Fund (in July)

While I’m not suggesting a Christmas in July, I certainly do encourage you to start saving for Christmas in July. I like to call this the “Festive Season Fund” – a savings account specifically for the month of December. So, how do you do this? Well, I hope this infographic can help:

First things first. You need to know how much you typically spend over your December break. Take a look back at previous years’ expenses and figure out a rough average. Then tag on approximately 3-10% to account for inflation (based on your home country inflation rate) and, voila, you’ve got a target for your fund.

Next, write a comprehensive list of all the gifts you want to buy and expenses you need to cater for when hosting friends/family. This will allow you to see whether your expenses line up with your set target or whether you need to reduce spending in certain areas.

Once you’ve set your target and allocated expenses to that target, head over to your bank to open a separate savings account specifically for your festive season fund. Each month, you can directly deposit enough money into the account so that when December arrives, you’ve met your target and you don’t need to turn to debt.

You preferably want a savings account that makes it more difficult to immediately access the money. This will prevent the temptation to withdraw and spend or to use the money for emergencies.

And, lastly, you want to give yourself some financial wiggle room when saving for the festive season. As with anything in life, don’t be too strict on yourself. Rather prepare for the unexpected by saving a little extra (above your target) to cover any expenses you forgot to budget for.

Take Advantage of End-of-Season Sales
If you’re in the Northern hemisphere, July marks the middle of Summer. Having previously lived in Chicago for 5 years, I know that many of you just barely survived the Winter. And, while the warmer days are here to stay for the foreseeable future, winter is going to roll around again. And when that white Christmas returns, so does the seemingly unavoidable spending.

While there’s not much you can do about the weather, you do have full control over your wallet. So why not use the end of Winter sales each year to buy gifts in advance? They are almost always guaranteed to be cheaper as stores try to relieve themselves of the “old” stock to make room for the new.

This is particularly useful if you know that having a “festive season fund” is going to be too tempting to spend. Rather put yourself out of that misery and buy the gifts as and when you can afford them.

The reverse is true for the Southern Hemisphere. While us Southerners are preoccupied with trying to avoid the biting cold, why not think ahead to warmer days? And start buying Summer-appropriate gifts for your friends and family now when they are cheaper (and likely on sale).

Do take note, however – to get the best deals, you may need to shop the end-of-season sales earlier than July. Preferably, you want to shop for these deals as soon as the season ends when stock is still available.

Let the Creative Juices Flow

If you truly want to be festively frugal, why not put the wallet aside and rather give the gift of your time and love? What do I mean by this, exactly? Well, let the creative juices flow and, instead of buying a gift, why not create one yourself?

There is no shame in making gifts for your loved ones. If anything, these gifts are more sentimental and heartfelt.

Yes, it may take up a little more time and effort compared to pulling something off of a store shelf, but it can also save you a lot of money in the long run. And they can make for some pretty unique and memorable gifts.

How Else to Be Festively Frugal?

So, I’ve given my top 3 thoughts on saving for the festive season. But there are so many more creative and frugal ideas to add to your Christmas list:

  • Bake a gift, such as cookies
  • Grow a gift, such as a bonsai or orchid. Nothing shouts more of love than spending a year nurturing a gift for someone
  • Buy next years Christmas decorations on December 26th of this year – they’ll be so much cheaper
  • Even better, gather the family troops and create your own Christmas decorations
  • I have a friend in the US whose family collects a Christmas ornament for their tree whenever they visit a new city. This is a great way to stock up on decorations, but also attach sentimental and personal memories to each decoration. Each time the tree goes up, the entire family reminisces about those experiences and it becomes a great bonding experience
  • Book your festive season travels well in advance. Use Skyscanner to view prices for the entire month of December. If flights are cheaper a few days before you had planned to travel, consider revising your itinerary
  • Consider having a “giftless” festive season. Call up your family and tell them that you’d like to use the festive season to celebrate family rather than presents
  • Possibly re-gift any gifts that were given to you that you don’t use or that you have duplicates of
  • Final Festive Thoughts
  • Have you ever left the gift-buying extravaganza to the last week before Christmas? I wouldn’t wish that experience on my worst enemy! The crowded malls, the empty shelves (leaving you scratching your head with what to buy) and the mad rush to get everything bought in time and within budget.

Why put yourself through that kind of stress when it’s feasibly avoidable? Rather, use the strategies suggested here to prepare. Saving for the festive season doesn’t need to make you broke. Decide on a target, set up a fund and start early. You’ll thank yourself when December rolls around.


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O'Hagan is one of Personal Finance's New Voices and his finance blog is called the Saving Scientist

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