This Is the Smartest Money Move You Could Make This Month

Don’t kill the messenger, but it’s time to start thinking about the holidays. No, I’m not saying to bypass the butterflies and new routines of the new school year, skip Pumpkin Spice season altogether, and whip out the icicle lights and fake snow. I’m talking about something wise that will make the holiday season—and its aftermath—far more enjoyable for you.

Starting the new year financially behind because of holiday spending is a drag. But you can avoid it by carefully considering how much you want to spend (where and on whom), putting the money aside, and sticking to your budget.

Starting early—like, yes, right now, in August—affords you the time you need to put adequate funds aside. If you get paid every two weeks, there should be 10 or so paychecks between now and the end of the year, and with some smart planning, you might be able to cover your holiday spending without really feeling a dent.

The concept of saving ahead for an upcoming larger expense is something that the popular personal finance program YNAB calls saving for “True Expenses” (YNAB stands for You Need a Budget). Chunking out monthly amounts to set aside will help prevent overspending and racking up credit card debt.

Here are some sub-categories, under a general Holidays category, that you can begin brainstorming:

• Teacher gifts
• Neighbor gifts
• Gifts for garbage collectors, postal workers, housekeepers, doormen, etc.
• Gifts for children
• Gifts for extended family members
• “Experience” gifts
• Holiday party hosting
• Hostess gifts for holiday parties you attend
• Holiday decor
• Funds for taking advantage of after-Christmas sales
• Holiday photos and/or cards (including photography, printing, and postage)
• Travel costs

Start by estimating what you might spend in the appropriate categories above, then add it all up and divide by the number of paychecks from now until the end of the year. Whatever number you get, start pulling that amount into a savings account (or a trusty and timeless “envelope full of cash”) when you get paid and earmark it for December.

In budgeting for the holidays early, you’re likely to start preparing detailed lists and assigning dollar amounts to plan out your gift-buying strategy this year. Don’t let that work go by the wayside.

With your lists, you can begin taking advantage of sales and deals between now and the actual season, which will help to stretch your hard-saved dollars.

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Planning ahead also gives you the space to come up with alternative and frugal—yet no less heartfelt—options for gift-giving and spreading love and cheer. There’s plenty of time to plan and prepare homemade gifts for extended family and friends. And sometimes, those are the best gifts of all.