How to Be Fine on a Budget: Why You Should Start Saving for the Holidays in July

"I'm fine. I swear. I'm fine." -Your Bank Account

I'm an advocate for self-awareness and self love. A form of this is knowing your input and output in regards to your personal finance. Not knowing or being taken by surprise creates stress and anxiety. It's easy to get ahead as long as you understand your spending and saving habits. Being on a budget is not only fine; it's the smart thing to do.

I'm currently writing this in July and depending on when you read this; it may still be months away from the holiday season. I define the holiday season as the end of November thru New Year's Day. There are a lot of parties, dinners, and gift giving during this time. I know what you are thinking.

It's July. Why are we talking about Christmas gifts?

Well, the majority of us wait until the last minute without planning and spend more than we intended with money that was set aside for other priorities such as bills. Think about this. Each person has an expected amount of income each pay period and an approximate amount of money outgoing every month. If you are fortunate enough to not worry about this; this blog post may not be for you. However; for the majority of people, July's income pays July's bills. August's income pays August's bills and so forth. Of course, you should be contributing to your savings account each month as well. Due to this cyclical financial behavior, a lot of us end up pulling from our savings during the holiday season. We have not accounted or prepared for this time span of spending if we wait until December to figure it all out. The worst case scenario is when you charge your credit card and spend January and February of next year trying to pay off the amount. This is in ADDITION to those months' respective bills. It's a hole that is difficult to dig your way out of and may possibly damage your credit score which comes with more harmful effects.

This is exactly why you should start planning in July for a "Holiday Season Budget". You can continue to pay your normal reoccurring bills while putting money in your savings account with minimal changes in your spending habits when you have set aside a fund for the holidays this far in advance. The key is to set aside small increments which will accumulate over time to a larger lump sum.

Below is an example of the amount someone would spend during the holiday season just on gifts alone:

1. Significant Other - $400
2. Mom - $100
3. Dad - $100
4. Daughter - $300
5. Sister - $60
6. Brother - $60
7. Bestie - $60
8. Fav Coworker - $20
9. Aunt - $50
10. Uncle - $50

Total: $1200

Let's work back the $1200 total. If you start in July and want to be done saving by November 30th, you have 5 months to allocate $240 a month.

1. July - $240
2. August - $240
3. September - $240
4. October - $240
5. November - $240

Total: $1200

These are just sample figures. You will need to do minimal calculations to figure out your own realistic "Holiday Season Budget".

Step 1 is to list everyone you would like to give a gift to during the holiday season alongside the maximum amount of money you would like to spend on their gift. Add the total. Step 2 is to decide which month you would like to start and end. That will give you how many months to divide the total. Once you figure out the monthly amount to set aside; create an account or even an envelope system to put this money in each month. This is my favorite method for savings since it doesn't disrupt my daily life as much.

Keep in mind you can always search and compare deals online and not spend the entire maximum amount per person. Bookmark items on Amazon or scout out seasonal sales. You will also avoid paying the dreaded expedited shipping fees when you wait to the last minute.

Imagine how stress free it will be to have the $1200 by the end of November. Why wait until November to get started? You are already behind by that point. Some may argue they can just pull $1200 from their savings in December and shop the same. Money saving is a habit that is different depending on personality so we each have our preferred way. I think putting money into savings and then taking it back out periodically creates a sense of normalcy to those withdrawals. It's called a savings account for a reason. If you pull money out to buy holiday gifts; you will more than likely pull from savings to pay for other seasonal events such as your friend's bachelorette party or the concert that's coming to your city. This behavior is more reactive than proactive.

The take away from this is to be more prepared. My example included 10 gifts but I have not included holiday party purchases such as new outfits, random coworker secret santa gifts, or bringing a bottle of wine to multiple parties. Let's not forget the New Year's Eve parties and the cover charges. Your future self will thank you in December when all you have to do is order or shop for gifts. Your future self will also be appreciative starting in January without additional debt.

Namaste,

T. Singleton