Why You Need to Start a Holiday Gift Savings Fund Right Now

by Hank Coleman

Why You Need to Start a Holiday Gift Savings Fund Right NowLast year, Americans racked up an average of $986 on their credit cards during the holiday season according to a poll conducted by MagnifyMoney. There are better ways of giving a holiday gift than charging it on a credit card that you will be paying off well into the spring.

It’s only September, but the holiday season will be here quicker than you think. Rather than racking up as much as $986 in debt on holiday spending, you can be proactive by starting to save now for the holiday gift giving season. It typically takes people up to five months to pay off credit card debt that they’ve racked up during the holiday gift giving season.

According to a @magnify_money poll, Americans with added an average of $986 holiday debt last year.Click To Tweet

Here are a few tips to help you grow a holiday gift savings fund now!

How to Start a Holiday Gift Savings Fund

Make a List Like Santa

Just like Santa Claus, you should make a list of everyone you want to give a holiday gift to this year. And, stick to it! Make a list of people you’re giving gifts to this year.

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You will have to draw a hard line on who will receive gifts from you and who will not. You may want to start setting expectations now with friends and family. Tell them that you’re cutting down this year on your gift giving, but you’re upping your Christmas card list.

Know Your Christmas Budget

How much did you spend on holiday gifts last year? Were you close to the average of $986 we talked about above?

How many people does that number equate to? 10? 20? If you have a list of people and a budget for holiday gifts that you want to stick to, it can greatly help you to stay on plan and not deviate.

Invest Your Holiday Funds

Invest with BettermentInvest with BettermentDo you have enough money set aside this year for holiday gifts? Have you been saving throughout the year? Where have you parked that money? Most people simply have the money in a savings account, earning next to no interest.

Next year, you may want to consider investing your holiday funds in a mutual fund, certificate of deposit, or other investment. Those investments will give you a better chance of growing that money than a basic savings account.

Just be careful with money that you need in a short period of time. Investments could see fluctuations in their price, and your investment could lose money in the short-term.

Three months isn’t a long time, but you can also start saving for the 2017 holidays and beyond with a gift savings account through a reputable investment company such as BettermentInvest with Betterment. Betterment can help you optimize your investment portfolio based on your goals. Open a Betterment account nowInvest with Betterment.

Save the Change

Whether you get cash-back rewards on a credit card or you keep spare change from cash purchases in a jar, put these unexpected funds towards a holiday savings account. There are a lot of unique ways to trick yourself into saving money. Using these interesting ways will help you incrementally grow your balance almost without noticing it.

The best way to save is when you don’t even realize that you’re saving money. That’s one reason that I love the smartphone app, Digit.co. Digit monitors your spending patterns in your checking account and systematically withdraws a few dollars and stashes it in an FDIC insured savings account.

I’ve built up my Digit savings account to over $700 in just six months without even realizing that the money was being transferred. It’s that painless. Be sure to check out my full review of Digit.

Get Creative with Gift Giving

Gifts for family and friends shouldn’t push you over your credit limit for the holidays. It’s better to stretch your holiday gift budget rather than frantically trying to save up enough money to please everyone with pricy gifts.

There are plenty of ways to save money on Christmas gifts. You should consider giving “experiences” (e.g., massages, cocktail cruise, concert, etc.) instead of just items, which will be forgotten in a few weeks after the holidays.

You can give experiences as a gift with the help of Groupon or LivingSocial. Another thing that I like to do is to buy discounted gift cards online through a site like GiftCards.com. It’s also a great place to sell unwanted gift cards too!

You can also buy unique custom art for $5 on Fiverr.com. And, the list is almost endless if you just get a little creative.

There are better ways of giving a holiday gift than charging it on your credit card. With a little planning and forethought, you can have a great holiday season without going into more debt. You don’t want to start the New Year off by paying for credit card debt on holiday gifts you don’t even remember.

What about you? What are your favorite ways to save for the costs of gifts during the holidays?

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About Hank Coleman

Hank Coleman is the founder of Money Q&A, an Iraq combat veteran, a Dr. Pepper addict, and a self-proclaimed investing junkie. He has written extensively for many nationally known financial websites and publications. Hank holds a Master’s Degree in Finance and a graduate certificate in personal financial planning. Email him directly at Hank[at]MoneyQandA.com.


Hank Coleman has written 593 articles on Money Q&A. Learn more about Money Q&A on Twitter @MoneyQandA and @HankColeman.


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