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How to Save Money for Christmas

Christmas and the other winter gift-giving holidays aren’t that far away. You can either go into debt and start your new year off in worse financial shape than you’re in now, or you could save money for Christmas now so you can pay for gifts without debt.

Christmas hat on table with money

The solution may sound obvious: put away some money. But how to do that is not always  so obvious.

Some people are really and truly short of cash. Others just haven’t been taught good savings habits.

The good news is: to save up a small amount over a short time, you don’t need as many skills as it takes to save up, say, a mortgage down payment over a long time.

Saving money for the holidays

Let’s start with the easiest situation: someone who actually has disposable income. If you can pay your monthly bills and still have money left over for emergencies or buying stuff you really don’t need, then you have some disposable income.

If that’s you, then you just discipline yourself to save rather than spend. You have quite a few options. You may only need one of them, or you may choose to use a combination of them:

Online Savings Account

Open up an online savings account with an option to set up a recurring transfer from your checking account. Set up a weekly or monthly transfer that comes out before you have a chance to spend everything.

Cash Stashing

Take out some cash periodically and stash it somewhere in your home where you won’t come across it and be tempted to spend it.

Make it a Budget Item

When you’re doing your monthly bills, just create another one called “Holiday Fund” or whatever. Think of it like one more bill you have to pay a certain amount to each month, and pay it (by putting it in an online savings account or cash stash).

Save Your Change

Remember coins? If you still shop with cash (great way to prevent going into debt), there are a couple of ways to go about this.

(1) Always pay in whole dollars, and save all the coin change from every transaction. Depending how many transactions you have in a month, you can come home with several dollars a day using this method, whenever you shop.

(2) Always pay in $20 bills, and put all the the dollar bill change in a special part of your wallet, and put that money away in a cash stash at home. Obviously, you don’t have to do this in every single instance, like when you’re buying a 50 cent item. You know your savings needs, and how close you are to meeting them. This is just another way to remind yourself to put money aside.

Saving Without Disposable Income

What if you’re just barely making it on your current income? Let’s look at some ways to reduce your expenses temporarily.

I’m going to ignore the obvious – everyone knows that Starbucks lattes and manicures and lunches at restaurants are expensive, and there are do it yourself options that will save you a brick. It bugs me when financial advisors assume you’re indulging in stuff like that.

Instead, I’ll offer some less obvious ones that not all of you will have thought of. (If you have thought of all these, no worries – in the next section, I’ll cover suggestions for very frugal people who are stretched really tight.)


Temporarily suspend some paid subscriptions such as Netflix. Most services allow you a “suspension” option (designed for people who travel for months at a time) so you don’t have to cancel your account.

Suspend a bill

Temporarily reduce or suspend your cable/internet/phone package. This can be tricky – some services charge cancellation fees, so make sure you’re not giving up anything you can’t get back in a few months once the Christmas gifts are paid for.

But if you can do without cable for three months, or drop your land line, or cope with a slower internet speed (maybe this will finally push you to go sit in coffee shops with wifi and write that novel you’ve dreamed of for years), it’s a great way to save a good little chunk of money over a few months.

Sell Stuff

And what about selling stuff? You could have a garage sale, or put some items for sale on Ebay or Craigslist or through the local paper.

Or sell some DVDs you’ve tired of to a shop that re-sells them (if you shop on sale for DVDs, you may get back nearly what you paid for them). If you’ve got some nice items you just don’t really use anymore, turn them into cash!

Saving When You’re Basically Broke

For those of you really don’t have any money to spare and are already being as frugal as you possibly can, I haven’t forgotten you. Your situation is obviously a lot more limited than some of the others, but there are still options:

Pool with loved ones to buy the expensive presents

Let’s say the kids want a game console you can’t afford, and they’ve been really good all year and they deserve a nice present. Ask your relatives if, instead of everyone getting the kids small affordable gifts, you could all put something into a pool from which you’ll buy the kids that one big gift.

Forget the Christmas cards

Cards are pricey, and postage is, too. You can save considerably by sending everyone free electronic greeting cards. In the case of less email-savvy folks, be sure to follow it up with a phone call to make sure they got it.

If you don’t want to tell them you’re saving money (some people just don’t understand), just tell them you’re being more environmentally friendly with the e-cards.

Send the kids’ Christmas list to relatives

You can actually outsource your kids’ Christmas lists. Most relatives want to buy kids stuff they like, but just don’t know what the kids are into. Tell the people who normally buy for your kids several items on the kids’ lists, and get them to commit to something – kind of like a bridal registry.

This is a great way to spread out the expense of the kids’ gifts among people who were going to spend money anyway, without you having to spend as much as usual.

Only get presents for kids

The big gifting holidays are really mainly about kids, and for their benefit. Let the adults in your life know you won’t be doing gift exchanges this year because times are tight.

If you’re worried about looking like a cheapskate, let them know you don’t expect anything from them either. If you feel there are a few adults you have to gift, check out thrift stores and garage sales for like-new items.

Got any other suggestions for saving up for the holidays?