I know what you are thinking! Hasn’t Christmas been and gone? Yes, but I have decided that if the stores can start stocking Easter eggs and hot cross buns in January! I can talk about saving for Christmas 2014. Besides, the best time to start saving for it is now!
So, to get ready for Christmas 2014, the first thing you need to do is to set your goal. You need to know how much money you would like to have saved by a set date in 2014 when you would like to hit the shops.
Next you need a plan. As the saying goes, “a goal without a plan is just a wish”, so break your goal down into a weekly, fornightly or monthly savings amount. So if your savings goal is $300 for Christmas by the 3rd of December 2014. This calculates to 48 weeks from the 1st of January or $6.25 per week. $6.25 per week is not much, hey? So you give up a couple of coffees a week? Just doing that one small thing can result in $300 for Christmas!
Next you need to figure out where to put your savings. This is where it is different for everyone but here are my top 5 suggestions for how to save, not just for Christmas but for any goal.
(1) Find an online fee free account with a high interest rate and direct debit in your regular savings amount.
Have the direct debit come straight out of your pay so you ‘pay yourself first’ and watch the savings build. If you are anything like me, make sure the account has limited access so that temptation is minimized J Watch out for bonus rates, where an account has a high rate of interest for 3 or 6 months then reverts to a low rate. There is nothing wrong with taking advantage of these rates, then moving if there is a better offer. (Click here to see extra tips on how to make your savings work harder). This method should give you the highest pot of cash at the end of the period as you compound your savings using the best interest possible.
(2) Put your regular savings amount in a jar.
It is certainly fee free and you can even stick Christmas pictures on it to remind you of your goal. However, you do not get any benefit from earning any interest.
(3) Regularly purchase gift vouchers.
If having money around the house is too tempting, why not try regularly buying gift vouchers from your favourite stores. For example, if every two weeks you buy a Woolworths or Coles gift voucher you will have $520 in vouchers by the end of the year. Make sure you stash them somewhere difficult to get to and watch expiry dates. Most vouchers have a one year expiry but it pays to check.
(4) Start a Christmas Club account.
Many of the big banks don’t offer these types of accounts any more but many credit unions and building societies do. They allow you to squirrel away your regular savings amount, with access to the funds often not allowed until November, which helps to keep your savings goals on track. Interest rates on the accounts are small but many the accounts are fee free.
(5) Leave the money in your mortgage offset account.
The advantage of this is that the money will be earning the equivalent of 5% tax free (see my post on how offset accounts work here for a full explanation). The key here is to keep a diary of the money set aside and the trick is to not give into the temptation to spend it.
Saving for Christmas is not difficult. The keys are to start early, save regularly and to make sure you do not touch your savings during the year. These easy steps will help you sail through to a stress free Christmas 2014!
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The information contained in this post is general in nature and does not constitute financial advice. Please see your financial advisor for advice specific to your individual circumstances.