Daniel Ruppel, a financial planning strategist with TIAA, has a savings account dedicated to buying gifts throughout the year, including gifts for birthdays and for the holidays.
“Setting money aside for gifts keeps the savings strategy more focused,” he said. “If too many separate expenses are bundled together, it could end up making it harder to account for how that savings pool should be divided among various goals. For me, setting money aside throughout the year works well for holiday gifting since the timing of those gifts is known well in advance.”
Ruppel contributes to this savings account through automatic transfers throughout the year. At the end of the year, whatever is left in the gift account becomes his budget for holiday gift spending.
“Still, it takes some discipline to stick with it,” he said. “That means keeping track of what I’ve spent, and tapping into that savings to ‘cover’ those purchases along the way. I’ll admit that I usually end up spending a bit more than I planned (and saved). But by setting money aside throughout the year, it helps me to mostly stay within the budget when it comes to holiday spending.”