Nikhil Sharma

I think this is right on. When I do this, I will break up the christmas savings into even more sub-divisons: gifts, stationery, decorations, tree, etc. I wouldn’t want to save some amount and then suddenly find out I can’t give a friend the gift s/he wanted because I wasted the last $x I had on hallmark cards.

RickSF

I think saving for Christmas (or any known expenses) early is a great idea. To take it even further- you can also use that extra time to get better prices on the same items, because you don’t have the time pressure. A few practical examples: if you know there are periodic sales on the gift you want you can keep checking flyers for a few months. If you are bidding on something on EBay you can afford to wait for the next auction if the price gets too high. If you are shopping in Dec you won’t have the option to wait for a sale or opt out of a bidding war time pressure will cause stress as well as costing more money.

Katie

Last year, I baked bread and made meals that I froze and then gave to family members for gifts. It saved us a lot of money, and they appreciated having food on hand (and one less trinket to sit around their houses).

Akasha

As a recent graduate with a huge pile of student loans to pay off for the next ten years I’m beginning to get really conscious of how I spend my money. I discovered weblogs such as yours and Queercents.com (which offers a lot of good advice, even if you’re straight – money appears to be sexually-neutral) and things have snowballed. I’m budgeting my expenditures and saving my pennies. Around mid-October I realized I should start a savings fund if I really wanted to buy all of those gifts this Christmas that I plan to. Thus, I’m putting roughly $50 in a separate account each week to save for the big day. This may sound corny, but it’s honestly thanks to people like you, Ramit, who offer simple advice to everyone about money. Sure, I was saving money before, but it was going into one sort of blobby account. I don’t necessarily know what all that money is going to be for and at times I felt like I didn’t need to put as much into it because I couldn’t clearly define what I was saving it for. Now that I’m actually taking a hard look at my finances, it’s really making a lot more sense.

Anyway, to make a long story short – I totally agree with you on this – the longer you save the more you’ll have to spend OR the less you have to put in each week to get to that number you want to spend. Great post!

SW

We use the biweekly system to get two paychecks worth of extra savings each year (one goes to X-mas, one goes to taxes). If you get paid biweekly (instead of once or twice a month) there are two months each year where you’ll get an extra paycheck. For us, there are two known expenses each year that are more than the norm: taxes and Christmas. So one of the extra paychecks (usually march or april) goes to paying whatever we owe in taxes while the left over pads some savings accounts and the other (usually sept/oct) goes to paying for our Christmas budget. It’s great, because Christmas is paid for before we even get there and it really cuts down on the stress.

Tyler Karaszewski

“Buckets” are extra complication to manage, and counter-productive in the long run. All you need is a “stack” of savings goals. Let’s say you have three savings goals. You want to save a $2000 emergency fund, $2000 for a nice flat-screen TV, and $2000 to take a trip to Europe.

Say that you can afford to save $300/month.

If you do this with “buckets” You can put $100/month into each bucket. When do you get to take your trip? It takes you 20 months to save your $2000. What about your TV? You don’t get it for 20 months. Your emergency fund? Not ready for 20 months.

Say you do this without buckets. You just “stack” your goals like this:
$6000 (total) – $2000 – TV
$4000 (total) – $2000 – trip
$2000 (total) – $2000 – emergency fund

Now you throw all your money into one big savings account, so that When do you have your emergency fund saved? It takes you less than 7 months. How about your TV? You have your TV in 14 months. What about your trip, did that get pushed back because you got your other goals sooner? No, you still get it at 20 months. You just prioritize your goals and save for the lowest one on the stack. You can remove it from the bottom of the stack once your goal is met. Your total savings goal is just the sum of everything in your stack, and you meet your goals faster.

thisisbeth

Tyler–the bucket and the stacking approach can go hand-in-hand. I have three different accounts for my longer-term saving plans (emergency, car, and house down payment–order of priority). I know right now that if a huge emergency were to happen, and my emergency fund didn’t have enough funding, money would be taken from the car and house funds. It’s just fun to see the three longer-term goals grow. If I would be saving solely for my emergency fund right now, I’d be a little depressed that my plans for a new house are so far away, and a little nervous that if my car would have a major break-down (one not worth repairing), I’d have to raid the emergency fund to buy a “new” car. Sure, it’s no different either way, but it makes me feel better to see money allocated to certain expenses.

[Right now the car fund has the most money, so it gets the least money each paycheck. The emergency fund has the least money and gets the most money for each paycheck. When the account balances even out, then I'll even out the payments.]

April

I won’t post a million ways to give inexpensive gifts, but I will say that I don’t believe in telling people you aren’t getting anyone anything except myself. It’s rude to make that statement, and I promise you will offend people. It’s less rude to say nothing at all.

There are plenty of ways to show love and appreciation inexpensively…Google it.

Juli

I’ve actually put a “Gifts” column in my budget for each month. I know roughly how much I spend on each person I buy gifts for and allocate it through out the year. I do this because I know I’m one of those people who sees something perfect and gets it right then. It works out great because I’m usually done Christmas shopping by the end of October and I can use the money that I save in my work Christmas account for a little gift for myself (or it just goes into savings). Plus, for all the people that I’m sort of friends with (usually just spend money on family and the closest friends) I just make candy. Gotta love having a hobby that produces gifts. It’s a win win!

Start Financially Planning for the Holidays Now [Saving Money] · TechBlogger

[...] this gift-giving season. Let’s hear how you handle your holiday budgeting in the comments. Here’s how I start planning for Christmas — in October [I Will Teach You To Be [...]

Jim C

$907 for Christmas shopping?! Yikes! No wonder the average person has so much credit card debt.

Steve W

My wife finished our Christmas shopping in August (for 5 kids and others). We don’t have extra money laying around, but I do have Excel and 5th Grade Math: I total up for an entire year every major “one-off”/non-monthly expense, including Christmas, vacation, auto tax, birthday presents, insurance payments, pool membership, etc. Then I divide the total by 26 pay periods, and save that amount each pay-period to cover it. For me, those figures were $8,786.12 annually and $337.93 per pay check. In the event that my spending gets ahead of my savings, which happens, I use my emergency fund to temporarily cover. Much peace of mind comes from knowing that I have a plan to cover annual, big-event expenses, and that I can live within my means (i.e. no credit spending on non-investments).

mary

Thank you so much for offering the “buy no gifts” option. Last year I encouraged my family to institute that idea, and we wound up having such a lovely family get-together without the anxiety around a) what the hell to get each other and b) the fact that none of us can *really* afford gifts. It’s been a nice way to refocus on what we each actually value.

Eric E

Ramit,
I am so grateful for the advise that you continuously give out throughout the year. That is why I was going to buy you a gift from your Amazon wishlist, but “….this year, the only gift I’m giving is to get myself financially stable…”

Sorry… maybe next year!

Dale Swinford

One thing I haven’t seen mentioned yet: our “extended family” includes several “20-somethings”, as well as moms and pops and uncles and aunts.

A few years ago, the “older” generation realized that if *everyone* got a present for *everyone*, it would seriously tax the kids’ finances, so we instituted a system of putting everyone’s name in a bowl and having each person pull out a name when we all get together for Thanksgiving. You are responsible for purchasing a gift for the person who’s name you drew, and no-one else. We put a strict limit on the amount (originally $25, but now up to $100, as the kids got older).

The net result of this is that *everyone* gets a gift (and a nice one, instead of a “trinket”), and no-ones budget is broken at Christmas. An interesting side effect is that the “geezers” can still “go crazy” on spouses and grandchildren (and we do ), without the expectation that the kids will be paying for Christmas until June.

Matt

I am able to save by keeping several no cost or at least very cheap and frugal hobbies. As long as you can keep yourself occupied cheaply, this is all that matters.

I restore junk furniture.
I program games using free software tools.
I build websites and try and host them at home.
I am attempting to build a company on nothing, it may not work but
it is fun to try.
I train my dog and cat to do tricks. Cat hasn’t learned much.

linda

I am 57 years old and I rarely do much for Christmas. My parents have every thing they need or want. So I do not send them anything. They have suggested this.

For my kids but I give them a real special gift. I live on the West Coast and they live on the East Coast. What I give them is a $50 gift certificate for Southwest Air for Christmas and a $25 gift certificate for them for their birthdays. That way they have some money to help them come visit me.

For the boyfriend I buy him a book from the Friends of the Library book sale. Something special that I know he would like. Most of their books are in great condition for a few dollars.

My Christmas budget $160. I hate the consumerism of Christmas. It is such a turnoff!!

aimee

My husband’s family is pretty materialistic and attempts at limiting gift giving to one person drawn from a bowl haven’t worked. So we have to buy for twenty people just on his side, and they have everything to begin with.

I stopped buying individual gifts for them years ago and instead buy each couple (aunts/uncles etc.) the same thing. Last year we made calendars on Shutterfly for $15/each. This year’s gift is a crystal ornament set from Pottery Barn. I found them online back in February marked on clearance from $40 to $10 each. I bought ten for $100. Bonus: they came gift wrapped. Bah humbug!

Beestro

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