The December holiday is just around the corner, and you want it to find you financially prepared. The best way to do that is to start saving for it now.
According to the WorldRemit 2022 Cost of Christmas Study, the average Kenyan household spent Ksh25,698 during the holidays.
The festive seasons are a joyous time to get together with your family, travel, and exchange gifts. All of this requires a ton of money.
If you let the holidays creep up on you with no holiday fund, you might struggle to enjoy it as much as you'd want. Knowing that you will have a certain amount accumulated for the holidays can give you peace of mind, and you can comfortably prepare for the December holidays.
This article will explore six steps to save for your December holiday today.
The first step to successfully saving for a holiday is to create a budget, which will guide you on how much you need to save. To get started, determine the total amount you can afford to spend during your December holiday and set that as your target goal.
Your budget will determine the activities you can enjoy during your holiday. For example, if your plans include going on vacation to the coast, attending a family reunion upcountry, and buying gifts for your loved ones, your budget will likely need to be larger compared to someone who plans to do only one thing from that list.
Additionally, your budget will decide how much you need to save each month to achieve your goals. Without a budget, keeping track of your progress will be challenging, and December may arrive without you having saved enough for your desired activities. This can lead to the need to cancel your trip, dip into other savings, or even go into debt.
Pro Tip: Make sure that your December budget is realistic to avoid future disappointments.
Read Also: How to Create a Goal-Based Savings Plan
Once you know how much you need to save, the next step is to build a holiday fund to help you achieve your goal. This should be completely separate from your other savings. This will ensure you can focus this money on your holiday dreams and independently track your progress.
One way to do this is to start a holiday sinking fund. This is a dedicated, separate fund or savings account that enables you to set aside money for your holiday expenses. Typically, you will need to save a small amount each month for a specific period until December. For instance, if your December budget is Ksh30,000 and you have 5 months to save, you will deposit Ksh6,000 monthly to the holiday sinking fund.
Pro Tip: Automate your holiday savings! Set up an automatic transfer for each week, day, or month so you never miss/forget to save.
To achieve any financial goals, you might need to make some sacrifices, including cutting expenses. This is especially important when saving for a big event or purchase, as it ensures you comfortably hit your target.
You might want to consider temporarily cutting down on "wants" spending and finding ways to reduce your current expenses. Luckily, you can do this in multiple ways without completely disrupting your lifestyle. For example, if you have a habit of eating out, you can reduce how often you do this or choose less expensive restaurants when you do eat out. Or you can cut those subscriptions you don't need and direct the extra cash you save to your holiday fund.
At first, cutting these expenses might be painful, but when you reach December and have your dreamy holiday, you will be happy with your decisions.
Pro-Tip: As you approach December, consider doing a no-spend November Challenge. The challenge involves not spending anything for that month except the essentials. This will inevitably lead to saving more money to add to your holiday fund.
To help close any savings gaps, look for ways to earn extra income. This strategy can also be an alternative for cutting expenses if you are already on a tight budget.
If you want to earn extra money but are limited on time, as you are working on your main job, consider gigs that are flexible. For instance, you can try freelancing after your 9-5 and on weekends. If you have a car, you can do taxi hauling business on apps like Uber and Bolt, and if you are an expert in your field, you can search for consulting gigs.
Other ways you can make extra cash include:
Pro Tip: Deposit all earnings from your side hustles and any extra money you earn into your holiday savings account. This will ensure you don’t have a chance to misappropriate them.
Read Also: 8 Ideas to Create Multiple Sources of Income
Saving money can be a daunting task. One of the effective ways to ensure you reach your goals and don't lose track along the journey is to constantly track your savings and adjust depending on your changing financial situation.
Tracking your progress is important as it ensures you stay motivated and achieve your savings goal within your time horizon. In case you are lurking behind, you'll be able to tell and take the necessary steps to get back on track.
You can use a spreadsheet or a budgeting app to track your savings. This will help you monitor your savings account balance and know how far you are from hitting your target.
As you save for your December holiday, it is crucial to remember that life can be unpredictable, and your financial situation might change for better or worse. Therefore, be prepared to adjust your savings plan as needed.
If you receive a raise, a windfall, or a bonus, consider increasing your savings rate if you are behind your target. And if unexpected expenses arise and you don't have emergency savings, you may need to adjust your timeline or reevaluate your goals, as you'll likely have to prioritise the emergency over the December holiday.
Pro Tip: To avoid dipping into your holiday savings account in case of an emergency, ensure you have a solid rainy day fund.
It can be challenging to remain on track when saving for a goal that's months away. If you are not careful, you can easily lose focus and spend the money on things you want now. As such, you need to develop a way to stay motivated and fight off the temptations of short-term pleasures and save towards your goal. Here's how you can do that;
Pro Tip: Create a progress bar to monitor your progress and celebrate every milestone. Did you hit 25% ahead of time? Celebrate by saving an extra Ksh500 to grow your fund.
One mistake you should avoid when saving for your December holiday (or any other goal) is to treat it like an afterthought. People often save money at the end of the month, i.e., what they are left with after all expenses. What you should do instead is make it a habit to prioritise saving. Immediately you receive your salary, direct a portion to your holiday fund. This will ensure you religiously save for your goal before you get the chance to spend it.
If you have bad spending habits and fear being tempted to use your holiday money before December, save it in an account that makes it difficult to withdraw. This can be a traditional bank account but don't apply for a debit ATM card or activate Internet banking. You can also consider MMFs and fixed savings accounts that require up to 48 hours to process a withdrawal.