The holidays are just a few months away. If your bank account is nearly depleted — and you want to buy gifts while avoiding credit card debt — you’ll need to start saving right now.
What follows are simple ways to fund gift shopping without feeling much pinch at all. Each tip includes an estimate of your possible savings between now and New Year’s.
With so many jobs lost this year, ideas for saving on holiday costs are especially welcome. “12 Ways to Get the Best Price on Any Gift” has more tips.
1. Stop lending to Uncle Sam: $684
If you get a fat tax refund each tax season, you’re giving the U.S. government an interest-free loan. Stop that.
As of July, the Internal Revenue Service said tax refunds from the 2020 filing season — meaning refunds for the 2019 tax year — were averaging $2,741.
That is about $228 per month. Adding that up for the three months from October through December would give you an extra $684 in your upcoming paychecks for gifts.
Get your hands on that money ASAP by changing your W-4. (That’s the IRS document you filled out telling your employer how much to withhold from your paycheck for federal income tax). The IRS has information at its website, including a Tax Withholding Estimator that helps you find the correct amount to withhold.
To change the amount withheld from your Social Security payments, use Form W-4V instead. We walk you through this process in “An Easy Way to Avoid a Tax Day Bill on Your Social Security Income.”
2. Start a Christmas Club: $300
Money Talks News contributor Donna Freedman describes this time-honored way to save for holiday gifts:
“Back when the Earth was still cooling, my mom had a Christmas Club. The workplace credit union took a certain amount from her paycheck each week so that she and my dad could pay cash for all of those bikes.”
There’s still time to enjoy the savings this year. Open a bank account just for this purpose and set up an automatic monthly deposit into it. Start saving $100 a month now, and you’ll have $300 by the holidays.
3. Sell things you don’t need: $100 to $400
Gather up gently used clothes, sports equipment, musical instruments, books, furniture, electronics, dishes, antiques, movies and video games you no longer use.
Then, sell your stuff using one of these options, all of which are likely safer than a yard sale in the age of COVID-19:
4. Make micro trims: $300
Make a bunch of small cuts in your spending on discretionary items. Perhaps you drop one night of dining out or takeout per month, or cut a couple of snacks out of your grocery budget.
Make enough of these small trims to save $100 each month.
You’ll hardly notice the difference. Put the monthly $100 you save into your holiday fund.
Looking for inspiration? Here are “21 Items to Cut From Your Budget That You Won’t Even Miss.”
5. Earn extra cash: $400 or more
Think about what you can do to make extra money before the holidays. You might like walking other people’s dogs, or even caring for them in your home, for example.
You could turn your hobby into a small business, deliver newspapers or try working as a customer service representative.
See if you can earn $400 for holiday gifts. Get started by checking out these “10 Ways Anyone Can Earn More Income.”
6. Put your phone bill under a microscope: $90 to $150
Take a good look at your phone bill. Are you really using all the minutes and data you’re paying for?
If not, drop your plan down a level and put the money saved into your holiday fund.
Even if you are using all you pay for, can you reduce or eliminate some of the data and services you’re currently paying for? Phone companies, especially during this downturn, may be offering discounts to help customers stay afloat. Ask if they will trim your bill. But first, do your homework with this tool that shows competing rates.
If you slice $30 to $50 a month off your phone bill, that’s $90 to $150 by the end of the year.
Apply your negotiating skills to other bills after reading “5 Monthly Bills You Can Easily Negotiate Down.”
7. Drop your gym membership: $174
Are you still paying for a gym membership — even if you’ve been avoiding the place during the pandemic? It’s time to rethink that expense.
Many gym members don’t go often enough to get their money’s worth. Typically, they used their facility twice weekly, on average, spending $58 a month for the privilege in 2018, according to one estimate. Cutting that cost could save you $174 by year’s end. Instead, exercise for free by walking, hiking, running or riding a bike.
Or take a brief gym break. Some gyms let members take one to three months off a year, meaning that you skip payments for those months if you stay away from the gym.
You’ll find more tips for free exercise in “8 Ways to Save on a Gym Membership.”
8. Modify your car insurance coverage: $131
If you’re driving an older vehicle, you may be able to save by dropping the collision and comprehensive auto coverage.
Nationally, the average cost for comprehensive insurance is $160, and the average cost of collision coverage is $363 a year, according to Forbes. Dropping both could save you roughly $523 per year — or about $131 from October through December.
Car loans and leases typically require comprehensive and collision coverage. But after the vehicle is paid off, it’s usually optional. (Most states require drivers to have liability insurance.)
In “How to Get the Best Possible Deal on Car Insurance,” Money Talks News founder Stacy Johnson says:
“The rule of thumb when it comes to comp and collision: If the premiums exceed 10% of the value of your car, you might consider dropping the coverage.”
Just make sure you can cover the cost if your vehicle is stolen or totaled.
9. Quit smoking: $573
Get a jump on your New Year’s resolutions by quitting your tobacco habit right now.
The average cost of a pack of cigarettes is $6.28, according to Smokefree.gov. If you smoke a pack a day, your habit costs $2,292 a year.
That’s around $573 you can save in three months if you quit right now.
10. Cut the cable: $591
Dumping cable TV is increasingly attractive. You can pick up HDTV on local stations for free with an antenna, watch plenty of shows for free online and — with a subscription to a streaming service — watch all the movies and premier TV shows you want, in some cases for $20 a month or less.
The average cable bill was $217 a month, Consumer Reports’ 2019 study of cable costs found. Cutting that to $20 saves you $197 a month — or $591 for the last three months of this year.
What’s even better than cheap entertainment? Free. Here are “15 Free Streaming Services to Watch While Stuck at Home.”