Christmas Savings Plan - 6 Quick and Easy Ways to Start Saving for a Debt-Free Christmas

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.

Editor's Note

You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone. This content has not been provided by, reviewed, approved or endorsed by any advertiser, unless otherwise noted below.

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? Americans consistently rack up more than $1,000 in debt over the holiday season. And only 42% of holiday shoppers say they can pay that debt down in three months or less. So many shoppers are going to take months--or maybe even years--to pay down the debt that they earned in about a month of shopping.

Regardless of your current debt situation, adding more debt to the pile just to add some more gifts under the tree isn’t a good idea. That’s why it’s so important to start saving now so you’ll be ready come December.

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.

Deal of the Day: Chase is now offering a $200 cash bonus when opening a Total Checking® Account. No minimum deposit and all deposits are FDIC insured up to the $250,000 per depositor maximum.

1. Implement Automatic Transfers

Automating your savings brings a little Christmas magic to your savings account. Set up an automatic 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 cant talk yourself into using it toward some other expense. It’s out of sight and 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. (Check out the last section of this article to find out how!) 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 your main checking account 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.)

2. Join a Christmas Club

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

If it’s a workplace Christmas Club, your employer will set aside a portion of your paycheck each month. That money may go into an account you can access. Or it might come back to you in the form of an extra check-in November or December. It’s a forced saving that you can sign up for during your annual enrollment period. But your employer may be able to add you to a Christmas Club midway through the year, so it’s worth asking.

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.

3. 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 are 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.

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 cell phone bills 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.

4. 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 the 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 or Facebook Marketplace 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.

If you like to buy unique gifts or make your own and you start automatic savings, you can dip into that holiday savings ahead of time as gifts come available or craft supplies go on sale. Now you’ll just have to figure out a secret place to stash all those gifts for a few months!

5. 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 be approved for the rewards card you’ve chosen. If not, choose one with lower rewards and 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!

6. Consider a Side Gig

Many people pick up part-time jobs as the holiday shopping season ramps up. But it can be hard to work extra hours during that season when so much is going on. You don’t want to miss parties and family get-togethers!

Instead, consider checking out appealing side gigs starting now. Even if you only make $200 a month in extra money from July to November, you’ll hit that $1,000 mark we talked about earlier in this article. And making $200 a month in extra cash is really not at all difficult. You could drive for Uber, do some personal assistant work, or mow some lawns over the summer. Here is a huge list of side hustle ideas where you might find a way to make your holiday money in the next few months.

Related: Swagbucks pays you in cash back or gift cards for filling out surveys, voting in polls, watching videos, playing online games and even shopping. It’s free to join so you might as well sign up for Swagbucks now and start making money.

Take Time to Make a Budget

I already mentioned this in the section above, but I can’t stress it enough. All of these 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.

Empower is the online tool I use to track everything from budgets to credit cards to investments. Empower is excellent if you need an all-in-one financial dashboard. Since it tracks investments along with budgets, it’s a good option for getting a handle on all your finances.

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 I’ll purchase some of those gifts for that occasion. 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.

(Personal Capital is now Empower)

Empower Personal Wealth, LLC (“EPW”) compensates Webpals Systems S. C LTD for new leads. Webpals Systems S. C LTD is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC

Abby Hayes

Abby Hayes

Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University Purdue University Indianapolis, and lives with her husband and children in Indianapolis.

Recommended Stories