Why It’s Time to Think About the Holidays

I'm one of those people who hates to walk into a store in September and see holiday decorations and wrapping paper. So why would I suggest someone think about holiday planning now, when many of us have just finished shopping for school supplies? It's a simple matter of the early bird saving a whole lot of money…and avoiding a credit card hangover in the New Year.

Here are seven tips to save money and reduce holiday stress:

1) Plan ahead, and be specific: When it comes to managing your money – whether it’s holiday spending or saving for a goal like retirement – you are always better off planning ahead. Make up your holiday list and set a specific dollar amount for each person. Then work backwards: How much do you need to save in 12 weeks, eight weeks, two weeks and today to reach that goal? Let’s say you want to start shopping the first week in December and your budget is $500. If you start saving on September 15, you need to set aside $6.50 a day to reach that goal. Can you cut costs or boost your income by that amount? (Meanwhile, if you have the money on hand, you can jump on sales between now and the holidays and reduce last-minute shopping stress.)

2) Think holistically about costs: When you’re planning the budget, don’t forget about the cost of holiday cards, postage, decorations, the "Secret Santa" exchange at the office, bottles of bubbly to bring to parties, and how much you’ll lay out on holiday tipping. The holidays can quickly become a black hole in your budget if you don’t look at the big picture.

3) Think time, not money: The benefit of starting your holiday planning now is that you have more time to put some thought into your gifts and make them really meaningful. For instance, you have the time to capture a great photo of your kids with their grandparents and frame it; include a mat around the photo with the kids’ fingerprints, drawings or little notes about what they love best about grandma and grandpa.

4) Choose layaway instead of credit cards: Layaway is making a comeback at many retailers. You pay in installments over a number of weeks and get the item when you’ve paid in full. There’s no interest, although there is likely to be a small fee to set it up. If you start in September, chances are you’ll have the item fully paid by the holidays – and no debt hangover to tackle in January.

5) Watch for special store reward programs: Some retailers are putting a new spin on the decades-old concept of the "Christmas Club account" – special accounts that banks made available to help consumers save for holiday shopping. Except these days, banks offer paltry interest rates around 1 percent. If you’re a big toy shopper, consider the Toys "R" Us Christmas Club promotion: You load money onto a plastic gift card, and Toys R Us will give you a 3 percent reward on the balance starting October 16. So if you put $400 on the card before October 16, you’ll have a total of $412 to spend. Combine that with sales and coupons and you’ll get more mileage out of your shopping budget. (Shoppers can begin using the cards starting October 31.)

6) Save money by creating temporary rituals: From now until December 1: Save all the $5 bills from your wallet at the end of the day. Bring your lunch to work every Monday, Wednesday and Friday. Get all of your books and movies from the library. Invite friends to bring their own beverages to your place twice a month instead of meeting at your usual happy hour place. Switching a habit – and knowing that it’s just for a few months – can help you build a holiday fund.

7) Look online for deals on holiday cards: If you have a digital camera, go to a site such as Snapfish or Vistaprint and design your own holiday card. You’ll often get a lower price (and may get free shipping) for doing your card before Thanksgiving. I ordered 100 4 x 8-inch postcard-style cards with a photo of my kids from Vistaprint for $22.50 (including envelopes) – a savings of about $20 from the year before, when I had them made at a warehouse club.

Do you plan ahead for the holidays or are you a last-minute shopper? Which strategy works for you and why?