Can you believe that Christmas, Hannukah and Kwanza are just a couple of months away? Now is the time to begin making your plans for the shopping season and that plan should include getting your shopping done even earlier this year! It may seem like you have plenty of time to get prepared, but the truth is that every year many of us scramble at the last minute because the holidays have snuck up on us out of nowhere.  

We want to enjoy the time with our families and make the holidays as stress free as possible but to do that, we need a plan! If you’ve been following the Making Money Personal podcast, you may have heard about sinking funds. Sinking funds separate savings accounts that you make steady contributions to over a period of time in order to save for something you plan on purchasing in the future.   

A sinking fund is the perfect strategy for your holiday gift-giving! You might already have money saved up specifically for this purpose but if you don’t, don’t sweat it. We are just about two months away at this point, but you can still save most, if not all, the funds necessary to cross everyone off your list.  

While we won’t go into too much detail about sinking funds right now, we are going to sum up the sinking funds process:  

1. Set a budget for the event you’re saving for
2. Figure out how many paychecks you have until that specific target date
3. Divide the budgeted number by how many paychecks you will have to get the number you should be putting aside each paycheck

It may be a little difficult to fully fund a holiday sinking fund at this time since we are already in the middle of October; however, if you can get into the habit now and start saving for these special times, you can continue after the holiday is over to ensure that by this time next year, you are fully funded in your gift giving sinking fund.  

Starting at the beginning of the year will also make your contribution per paycheck much lower than it will be right now. For example, if you want a $500 gift-giving sinking fund and only have 5 paychecks to save for it, your contribution will be $100 per paycheck. If you start saving for that same amount at the beginning of the year next year, your contribution per paycheck will be about $19 which seems much more manageable.  

If $100 per paycheck doesn’t seem attainable to you, there are a few changes you can make for the next 2 months. A few ideas are cutting down on eating out, making coffee at home instead of purchasing out and pausing subscriptions until the new year rolls around. Since the last few months of the year are usually very busy with multiple events and family get-togethers, you might not have the time to hit the gym or watch the latest shows on Netflix. Temporarily pausing these expenses for two or three months can really add up, which will give you the chance to re-allocate that money towards your holiday spending. Once the holidays are over, you can revisit these expenses and put them back in your monthly budget. .  

If you are ready to start your holiday shopping, you should start now! The earlier that you start shopping, the less stress you will feel, and no one wants to be stressed out during the holidays. If you can make these few changes to start saving now, you can not only show yourself that you are disciplined but you’re also setting yourself up for an easier gift giving season next year by beginning to save at the start of the year!