We all know we're supposed to set aside money for things like emergencies, retirement, and college. But while these are all relatively high-profile categories, there are smaller yet significant items we need to save for along the way, one of which will be here before you know it: the holidays.
While many folks don't currently have the holiday season on the brain, the fact of the matter is that we're only a few months away from the most wonderful, albeit expensive, time of the year. And if you don't start saving for it immediately, you'll risk compromising your finances like so many people tend to do.
Avoiding the debt trap
It's nice to be generous and spread some joy during the holidays, but all of those gifts, decorations, and parties can really add up. And if you don't save for the whopping expense that is the holidays, you're likely to wind up in the hole like so many folks did last year.
The average American racked up $1,054 in holiday debt during the 2017 season. Worse yet, most of that debt came in the form of credit card charges that were never paid off. Furthermore, that $1,000 and change is just an average. If you're the type who tends to go overboard, you could wind up with a much larger pile of debt this time around.
A better bet? Plan for the holidays now, while you still have some time to save for them. You can start by mapping out a holiday budget to get a clear sense of how much you're likely to spend. Take a look at your receipts from last year, figure out what you plunked down on presents and decor, and do your best to estimate the bill you'll be looking at this December.
Next, start cutting back on spending to free up room in your budget. If you normally spend $300 a month on restaurants and takeout, eat at home between now and December. In doing so, you'll easily get an opportunity to bank $200 a month, which means you'll have an extra $600 to work with by the end of the year. Similarly, you might consider cutting back on other luxuries between now and the holidays, whether it means walking or biking instead of springing for rideshares or doing your own laundry rather than paying for the convenience of a drop-off service.
Just as importantly, consider getting yourself a side hustle to drum up extra cash for the holidays. If you have a talent, like writing or graphic design, that you're able to offer up, you could easily find yourself $1,000 richer by the time the holidays kick in. And if you're planning to apply for a seasonal position, here's some good news: Companies are expected to pay workers more this year than in years prior, and 84% of employers expect to need additional hands on deck as the holidays near.
In fact, the average seasonal worker this year will earn $15.40 an hour. Put in 10 hours a week over an eight-week period, and you'll have around $1,200 to work with (minus taxes, of course).
Though the holidays might be an enjoyable period to celebrate, they can also destroy your finances if you aren't careful. So consider this your warning call to start saving for them immediately. You still have a number of weeks before the gift-buying frenzy needs to kick, and the sooner you begin setting cash aside, the greater your chances of surviving the holidays with your finances intact.