Let's face it - the holidays are incredibly stressful.  For a lot of people the holidays involve travel, visiting with family, and of course gift giving.  What makes this all more stressful is the cost involved to pay for everything - almost all at once.

Many people put themselves in debt over the holidays just to afford plane tickets, groceries for holiday meals they are hosting in their homes and all those gifts.  The shock in January when a credit card bill comes in is felt by many.  However, with some advance planning starting in January you can make it a lot easier on yourself when December comes around again.

Holiday savings account

People always vow to put aside money little by little for items they want to buy later.  What derails those plans are emergencies or unexpected expenses.  Setting up an account specifically to buy holiday gifts at the end of the year is a proactive way to have money ready for the holidays.

Smartypig.com offers people the opportunity to create goals within a savings account.  You can create whatever goals you have whether it’s for a vacation,  new car, a brand new laptop and for holiday gifts.  The website allows set up several goals within your savings account, tools to track your progress as well as set up automatic funding from your checking account.  Another feature is the ability to share your goals with friends and a family using social media networks.  The purpose being that you can ask for donations or help towards these goals.  This however is optional since many people like to keep their finances private.

The best way to use this online savings account is to put automatically deposit money into this account every month.   First, estimate what your expenses will be in December.  Take a look at your bills from the last Christmas and add to that amount a cushion you believe is reasonable.   It may be an extra $100, $500 or even $1,000.  Then, take this estimate and divide it by the number of months left before November when many holiday sales start. 

For example, if you open this account in January you really only have ten months until the next holiday season.  If you estimate you need $1000 for gifts, plane tickets, etc. then divide this amount by ten to come up with the amount you need to automatically put into your savings account.  This comes out to $100 per month.  If you are paid on a biweekly basis or twice a month you can even split that amount in two so that you only put in $50 per paycheck.  The goal is to pay for the holiday over time.

Shopping ahead of time

Shopping for gifts ahead of time isn’t exactly a new tactic for holiday savings but many  people don’t follow through with this.  This is especially hard to do when the most sought after kids toys are not known until later in the year or with the technology being outdated so quickly these days this is a problem when buying for your gadget lovers. 

What you can do is buy other items you would need during the holidays – aside from gifts.  For example if it turns out that next year it’s your turn to have Christmas in your home you can take advantage of the sales in late December or early January on items to decorate your home or for holiday themed dishes and tablecloths.  You can also save money on wrapping paper, ribbons, boxes, tree decorations or lights.

Plane tickets are also a little tricky because plans change purchasing ahead of time could work in your favor if you choose a flexible airline (like Southwest).  Find an airline where you can make changes but only pay the difference in airfare and no fee changes.  You can save yourself a lot of headache in October and November when others are fighting to get the best airfare when you’ve locked down a low rate in the summer.  Booking plane tickets three to six months ahead of time can be tricky but can save you a lot of money.

Gift cards

One way to get around this is to purchase gift cards for yourself to use later in the year.  Gift cards these days can come in any denomination but most commonly  purchased in $25, $50 and $100 increments.  Again, look at the places where you shopped for gifts this past holiday season.  Most stores online and offline sell gift cards all year round.  You can also buy gift cards that aren’t specific to a store like a Visa or American Express card.  One warning is that some gift cards might cost a nominal fee to use more than once.  Check the terms of the gift card before purchasing.

Purchasing $25 or $50 gift cards once or twice a month can add up to a few hundred dollars by December.  If you plan it right you can cover all your expenses or at least subsidize a large chunk of what you might otherwise have to spend in one lump sum. 

What’s also handy about these gift cards is that they obviously good presents – especially if it’s for a specific store where you loved one likes to shop.  Either way, buying a gift card or two every month throughout the year can ease the financial pinch you usually feel during the holidays.

Ready for the holidays

As you can see from the above tactics we’ve discussed you don’t need to put yourself into debt by maxing out your credit cards to get through the holidays.  With a bit creativity,  planning and discipline throughout the year you can make sure that you have the funds available and ready when you face the hustle and bustle of another holiday season.