Here’s How and When to Set Up a Christmas Saving Plan

Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend.

Woman in a Santa hat saving money for Christmas holiday shopping

Editor's Note: This story originally appeared on The Penny Hoarder.

Don’t you want to scream when you see Christmas displays in the stores before Halloween? Or when “It’s Beginning to Look a Lot Like Christmas” is stuck in your head for two months because it starts playing in early November?

The Christmas creep can be annoying, but there’s at least one good reason to start thinking about the holidays as, if not before, the leaves start changing color: It gives you more time to save.

With all the decorations, food, parties and gift-giving, celebrating Christmas has become synonymous with spending money. The National Retail Federation found that consumers spent a collective $798.4 billion during the 2020 holiday season, up 8.3% from the year prior.

Waiting until December to prepare for these expenses means you’ll often end up charging your purchases and paying them off — plus interest — well into the new year. Instead, establish a Christmas savings plan to avoid debt and overspending.

Create Your Christmas Savings Plan

Saving with a jar of coins
Mintr /

To save enough money to cover all your holiday expenses, figure out how much you plan to spend and divide that by the number of weeks you have until it’s time to start shopping. That will tell you how much money you need to save per week to build up your Christmas fund. In the personal finance sphere, we call this setting up a sinking fund.

To estimate your overall savings goal, first make a list that includes who you’ll be shopping for and how much you’ll spend on each person. It may be helpful to refer to what you spent last year. Or you could research the prices of items you plan to purchase for each person and total them up.

Heads up: Your Christmas savings plan needs to cover more than gifts. So add estimated costs for decorations, food and holiday events to your shopping list. Between special events where you contribute a bottle of wine, gifts for your kids’ friends or an office Secret Santa, plus the bounty of food on the actual holiday, these “extras” can really add up.

Total everything and divide it by the number of weeks left until you’ll hit the stores. Unless you’re a fan of last-minute shopping, this means giving yourself some wiggle room before Dec. 25.

If your Christmas budget is $450, you’ll need to save $57 per week for eight weeks. If you want to save $800 to meet your Christmas savings plan goals, you’ve got to put aside $100 per week for eight weeks.

Another tactic for holiday saving is to determine how much money you’re able to save and create your holiday budget based on that. For example, if you’re only able to save $25 a week to go toward your Christmas savings, you’d save $200 in eight weeks. That would be your limit for all your holiday spending.

If you think you’ll need more money to pay for all your Christmas expenses and still emerge debt-free, you’ll need to start saving earlier so you have more weeks to save up. In fact, you can implement your Christmas saving plan anytime during the year.

As you start saving for Christmas, it’s good to keep your holiday savings apart from the rest of your money so you don’t accidentally spend your stash on everyday expenses. If you use a sub-savings account at your bank or credit union, set up automatic savings transfers each week to ensure you stay consistent.

If you take the cash envelope route, make sure you have an envelope exclusively dedicated to holiday expenses and not other short-term goals. Set weekly calendar reminders to nudge you to put the money aside.

Tips to Help You Save Money for the Holiday Season

Yunis Malik /

Trimming the fat from your weekly spending is a good way to find extra cash to put toward Christmas gifts. Take out your budget and highlight all the nonessential recurring expenses. Identify a few — like fast food dining or trips to the nail salon — that you can give up until you’ve finished your holiday shopping.

If you want to increase your savings fast, try a no-spend challenge. Or cut your grocery budget by doing the pantry challenge and do meal planning with what’s already at home.

Saving money for the holiday season isn’t all about making cuts. You can temporarily increase your income by getting a part-time holiday gig (bonus if you get a company discount) or doing odd jobs on Fiverr or TaskRabbit. Make room for the new gifts you’ll get by cleaning out your closets and selling stuff online.

In addition to a Christmas savings plan, you also need to set a Christmas budget that’s financially comfortable for you.

Here are some ways to spend less this holiday season.

1. Make Your Own Gifts

Woman crafting at home
SunKids /

Get crafty and DIY some Christmas gifts for your friends and family. Try one of these 12 DIY Christmas gift ideas.

2. Shop Early and Take Advantage of Sales

Man using credit card to shop online
Zivica Kerkez /

Rather than wait until you’ve reached your Christmas savings goal, you can use the money you’ve been saving up to buy gifts early whenever you catch something on sale. Bonus if you’ve saved any coupons.

3. Use Old Gift Cards

Woman with gift card
Creativa Images /

It’s easy to forget about gift cards you’ve gotten long ago that still have a balance. Dig out your cards and check the balance. Buying presents with your gift cards will free up cash to use for something else.

4. Cash In Your Credit Card Rewards

Couple in a cafe with a credit card
StratfordProductions /

If you get cash back or points for swiping your credit card, save those up in order to use them for your holiday spending. Just be responsible with your credit card so you can triumph in a debt-free Christmas.

5. Implement the Four-Gift Rule

Happy family at home
fizkes /

Save money by restricting the amount of presents you give your kids. The four-gift rule focuses on getting each kid just four things: something they want, something they need, something to wear and something to read.

6. Comparison Shop Online

Man doing holiday shopping online from his laptop with credit card and cat
RapunzielStock /

Do your holiday shopping online and compare prices to get the best deal. Some browser extensions will even do the work of saving for you. Be aware of shipping costs when shopping online. These stores offer free shipping with no minimum order.