Create a Holiday Fund by Following this Method
Well, folks — it’s that time of year again. Here in Montreal the days keep shortening as winter’s grip descends. December has arrived and with it, the holiday season. Do the holidays stress you and your wallet out? It’s a time of year where spending always seems to creep up. This makes sticking to a budget challenging. Many of us dread the “holiday hangover” that arrives with the bills come January, too.
This is where having a holiday fund comes in handy. By saving money specifically for this time of year, there’s no need to get financially stressed and ruin a year’s worth of hard work and budgeting. In today’s post, I’ll share with you a method I heard about a few years back for creating your own holiday fund.
Who is this holiday fund saving method for?
This method is great for those new to saving. If you’re someone who thinks they often “can’t find the money” to put away in savings, this might be a good way to get your feet wet. I should mention, that you don’t need to use the method for a holiday fund, specifically. It’s a great way to save for short term (it’s a 1-year strategy) goals or expenses, like a vacation or important purchase. If done properly and consistently, you’ll have $1378 in your holiday fund (plus whatever interest you earned) by this time next year!
I should note that you can modify the sequence of how much you contribute to the holiday fund. I find starting week one with $52 is better, particularly if you’re new to saving. Those first few weeks are when your motivation will be highest, and temptation to withdraw money should (hopefully) be lower. By the time you reach December next year, you’ll only be contributing a few dollars a week. For me this makes sense, since holiday spending tends to be spread out over the month. You’ll have more money available at that point since the bulk was transferred earlier. Some people might find starting week #1 at $1 meeting their needs better, which is perfectly fine!
Why I like this saving method
What’s important in this holiday fund strategy is consistency! You can’t miss a single week to ensure you arrive at the maximum amount at year’s end. This is a crucial skill to develop financially, too. Saving money, especially when you’re young or just starting out, needs to start somewhere, and even a tiny initial amount will grow significantly, if you give it time and are consistent in contributing. Every little bit helps! This holiday fund method is a great learning tool to teach new savers these principles, and a 1 year commitment doesn’t seem as daunting to most people (that’s just 26 pay cheques, assuming you’re paid bi-weekly). If you’re a visual person, like me, then I’d suggest making some kind of chart that you can use to track how many payments you’ve made, and how many remain.
Don’t stress out about money next holiday season — consider creating a holiday fund as one of your resolutions this new year!
What other strategies or methods do you use to keep your financial cool during the festive season? Let us know in the comments below!
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