Start building a holiday fund now

Timing is everything when it comes to saving for the holidays. So, to help you prepare financially – and mentally – for the most wonderful time of the year, here are 10 ways to start building a holiday fund.

1. Determine how much you’re willing to spend on the holidays. The holiday season can be stressful and expensive if you don’t have a strategy in place. To ensure your holiday season stays on budget, it’s important to set financial expectations and research items in advance. From gifts to food and anything in between, the costs of the holidays can add up quickly.

And while this holiday season may look a little different from past ones, it’s still important to prepare as best as you can. When it comes to your holiday fund, make sure you calculate your budget by separating it into different categories: presents, food/decor and misc.

First, determine who you are purchasing gifts for and how much you want to spend per person. Then, add everything up to get your gift budget. As far as food and decor, determine how much you need to spend for the respective categories. Of course, you’ll want to leave room in any of the spending areas for any additional costs and mark-ups.

2. Cut unnecessary costs. Before you can start saving, you must know where your money is going. Take a hard look at your monthly expenses and narrow down where you’re overspending so you can eliminate any costs. Whether you perform a subscription cleanse, negotiate your monthly bills, stop the frivolous shopping or skip out on the daily takeout orders, there are endless ways to cut costs and save money. Any money you “save” can go toward your holiday savings fund.

3. Implement a budget. To save money, you need to learn how to prioritize your finances and limit your spending. If you’re unsure where to start, consider adopting the 50/20/30 rule. Make sure you can afford rent/mortgage and any additional expenses such as cable, electric, etc. and spend no more than 50% of your after-tax income on essentials; 20% on financial priorities, such as debt repayments and savings and 30% on lifestyle choices, such as any personal expenses like shopping and takeout.

4. Commit to a no-spend month. Consider putting more toward your holiday savings by trying a “no-spend” week or month. The key to a no-spend period is to eliminate any extra spending during a specific time frame. Your spending should be limited to the bare necessities such as gas, groceries and utilities. So, create a list of essentials and avoid buying anything else for a designated period of time. If you’re a beginner, start slow and set a specific time frame to prepare – say, the first two weeks of October.

5. Set up weekly savings goals. Take out your calendar, planner or simply a piece of paper and count down how many weeks you have until the holidays. For each week, write down a set amount you want to save. It can range from $50 to $100 to even more. The goal is to save enough to cover your holiday expenses, which you can determine by setting financial expectations and researching items in advance.

6. Shop smart. It’s important to plan any large holiday purchases ahead of time to make the most of your budget without compromising quality. And thanks to end-of-summer clearance events, Labor Day sales and Black Friday/Cyber Monday deals, you can purchase gifts, decorations and more ahead of time without breaking the bank. Don’t forget to maximize your savings potential by comparing prices, stacking coupons and shopping through a cashback site like http://TopCashback.com to earn a percentage of your purchase back in cashback on qualifying purchases.

7. Pay in cash. If you find that having a credit card in your wallet when you are shopping is too tempting, then only carry cash. By limiting yourself to a certain dollar amount, you’ll be able to shop smartly. And of course, it’s enticing to buy whatever you want knowing that you have your credit card to cover the cost, but by limiting yourself to a certain dollar amount, you’re forced to ask yourself, “How much is this?” and “Is this product worth X amount of dollars?” These questions can help differentiate a “need” from a “want,” which can ultimately save you money.

8. Start earning rewards now. Contrary to the cash-only tip, if you use your credit card wisely, make sure you’re taking advantage of all of the rewards. Whether you put your rewards back in your bank account, use them during checkout while shopping online or opt for a statement credit, you can easily enjoy these benefits simply by using your credit card.

If you are able to choose categories that you can earn cashback on, make sure it is the one you will earn the most rewards on. For example, if you are doing the majority of your online shopping right now, using a credit card like the Bank of America Cash Rewards credit card can score you 3% cashback on online shopping purchases. Or if you’re planning to do your shopping closer to the holidays in October, you can score 5% cashback on online purchases from Amazon, Walmart and Target with the Discover it Cash Back Credit Card. As always, it’s important to weigh your options and make sure you’re aware of all the rewards and savings opportunities.

9. Stop paying for convenience. Paying for convenience might seem beneficial in the moment, but you’re paying for someone to do what you can do for free. Whether you are signed up for a food delivery subscription service like HelloFresh or purchase pre-cut veggies and fruits, sometimes what seemingly sounds like a “good deal,” actually costs you more. Save money by doing simple tasks on your own and not paying others to do them for you.

10. Save your change. One of the easiest ways to build your savings is by keeping the change. Whenever you break a big bill and get $1 and $5 bills back, for example, drop them in a jar at home. The loose change will eventually add up, and you can move it into your holiday fund.

Rebecca Gramuglia is a personal finance expert at TopCashback.com.