Summer is now officially behind us and we are into the Fall season. Before you know it that winter chill will be here and the holidays will be here. Are you ready for the holidays? Or are you in need of a well-deserved vacation? Do you have the money to fund any of these activities? Planning for the holidays or a vacation can be overwhelming, that is why you need a holiday fund. Here we are going to define what is a holiday fund, how to make your own, and the benefits of having one.
What is a holiday fund? This is money set aside throughout the year for all things holiday-related. This can include Christmas, birthdays, vacations, etc. Building a holiday fund prevents you from struggling for cash when the holidays come around. One of the main benefits of having a holiday fund is to ensure that you have enough money to spend on anything you’d want. And if you don’t end up spending all the money, you can save it up for another important occasion or spend that excess money on something else.
There are many advantages of having a holiday fund, including:
- It’s a great way of avoiding debt around the holiday time- during the holiday we tend to overspend and take on debt we didn’t need. A holiday fund can prevent you from overspending because you know the amount of money you have to spend, therefore, you are able to set aside the money for those expenses.
- Holiday fund equals less stress- Preparing for any holiday can be stressful by itself, therefore, you don’t want to add money stress in the mix of it all. By saving for your purchases in advance, it helps to prevent the stress of last minute shopping and overspending.
- It prevents you from dipping into your emergency fund- In the event you do have an emergency fund, you don’t want to be spending on non-emergency items using money from your emergency fund. Therefore, having a holiday fund separate from your emergency fund is a good thing.
I know some of you might be wondering, what if I’m in debt, can I still have a holiday fund? The answer is…YES. You can still have a holiday fund while currently in debt. This can be achieved with the right strategy and a good budget system. You’ll be able to pay off your debt while being able to save for a holiday fund.
A holiday fund and a holiday budget go hand in hand. It’s important to know how much you plan to spend, in order to know how much to save. You can create a holiday budget by making a list of gifts of what and who you want to buy for, and then decide on how much you would like to spend. In order to know how much money to save monthly for your holiday fund, you can decide the total amount of money you require for the holiday and then divide that by twelve to get your monthly savings.
Are you ready to build a holiday fund but don’t know how? Here are a few tips on how to get started:
- Create a separate account just for holiday spending
- Create a saving goal and set up an automatic deposit
- Consider a cash back credit card
- Start a side hustle just for your holiday fund
It’s never too late to start a holiday fund. So even if you’re reading this in September or later, you still have time to save for the winter holiday. Please bear in mind that a holiday fund doesn’t mean saving for the Christmas season only. It’s an all year round savings for any holiday. By creating a holiday fund, no matter what time of the year, you can reap the benefits of your savings when any holiday comes around.