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Are you thinking of Christmas in July? If not, it may be a good habit to build.

“The last thing you want is to get hit with an unexpected bill in October, November, December, that forces you to put a pause on planned holiday gifts,” Christine Samples, Banking Center Manager with First Merchants Bank (NMLS UI# 1790609), said.

Luckily, you can sidestep that scenario with a little bit of planning.

“I encourage my clients to start thinking about their holiday budget in January,” Christine shared, “because it’s a great time to take advantage of savings tools like a Certificate of Deposit (CD).”

But if you didn’t start your planning at the beginning of the year, there’s still plenty of time – and plenty of ways – to prepare for a happy holiday.

“A holiday budget looks different for everyone,” Christine said. “For one person that could be getting out of debt. For another person it could be saving, for another person it could be all of the above – or something completely different.”

So, how can you budget ahead for holiday savings?

Need help building a budget? We’ve got you.

Consider a CD

A Certificate of Deposit, or CD, is a special savings account that offers a high interest rate in exchange for not-withdrawing funds for a specific amount of time – typically anywhere from 6 months to 2 years. While these accounts often carry a larger minimum deposit requirement, there are some tailored specifically for folks saving up for the holidays.

“For example, we have a Smart Saver CD that you can open with $25 with a requirement to deposit at least $25 a month,” Christine shared. “It’s a really great option for folks on any budget, because if you do just the minimums for the 12-month term, come December you have a few hundred dollars – which will definitely make a dent in all those wish lists.”

The Smart Saver CD has an automatic transfer option, so that money is deposited directly from your paycheck.

“It’s kind of like how insurance comes out of your paycheck – you don’t even have to think about it,” Christine explained. “And since it’s a CD, and therefore has a penalty for early withdrawal, it really helps keep you disciplined about saving.”

However, be aware of that early withdrawal penalty, and make sure you’ve budgeted enough time for the term to expire before you begin your holiday shopping.

See if a CD is right for you.

Compare CD options with our CD calculator. Or, see how much you can save with our CD interest calculator.

Set up a holiday savings account

If you’re just starting to plan for the holidays now – don’t worry! There are still several steps you can take to make sure you’re well-prepared when winter rolls around.

“Now is a great time to set up a regular savings account,” Christine said. “You can make a separate savings account that’s just for holiday savings, so that you don’t accidentally spend from that fund.”


Just like with a CD, you can set up an automatic transfer or direct deposit to this account, so you never have to worry about manually adding and removing funds. While the interest rate on a regular savings account will be lower than with a CD, it can still add up over time – which can be a huge help if you’re celebrating on a budget.

Set a holiday savings goal with our savings calculator.

See if you can consolidate debt

However, short-term savings goals work best in combination with long-term financial goals, like focusing on paying down debt. Christine said that clients should strive to balance their short and long-term goals, even if it means they may have to make sacrifices in the meantime.

“When it comes to budgeting for the holidays it’s always a balancing act – you know, how much are you paying in debt and where are you in your financial journey,” Christine said.

For some clients, consolidating debt can actually be a smart move to help them prepare for the holidays.

“You know, if I’m working with a client and see that they have a lot of credit cards, to me that makes them a good candidate for debt consolidation,” Christine said. “Because I guarantee they’re not getting zero percent interest on all of those cards. By consolidating that debt with a single lender, you can potentially save hundreds – thousands – of dollars, monthly.”

“And if you add a CD or a savings account on top of that? That’s your holiday fund – and you didn’t even have to think about it,” she added.

See how much you could save with debt consolidation.

Want to get a good look at your debt? Our debt calculators can help with that.

Be cautious with credit cards

While it can be tempting to open a new line of credit and charge holiday gifts to a credit card, Christine advises clients to be cautious. While opening a new credit card is a tempting short-term solution, it can cause long-term problems down the line if you already struggle with debt, are working on building good financial habits, or have a history of heavy spending.

“As a banker I want to make sure that everyone is set up for financial success and not future problems down the line,” she shared. “And while a line of credit can bring someone a lot of freedom, it may not be the right choice for you at this particular time.”

If you do feel like you’re on sound financial footing and that opening a credit card would be a good holiday shopping solution for you, Christine still encourages a reserved approach.

“The age-old advice for credit cards still applies here – try not to charge anything to your credit card that you can’t pay off at the end of the month,” she said.

Want to gauge how good you are with money? Take our My Money Personality quiz!

How long will it take you to pay off a credit card? Use our credit card debt calculator to find out.

Weigh the pros and cons of gift-giving

But maybe none of these options work for you. If you’re struggling to keep the lights on or food on the table, even saving $25 a month can be difficult. Should you find yourself in this situation, Christine encourages considering short term sacrifices for long-term gain, especially if purchasing presents could set you back financially. And it’s advice she gives from personal experience.

“I know what it’s like to have this anxiety around affording gifts. I moved out and lived on my own as soon as I turned 18, and I had nothing – I had nothing. I remember scrounging for change to try and purchase food,” she shared. “When my husband and I got married, we were broke. One year, my husband got laid off in the fall, and I couldn’t have purchased Christmas presents if I wanted to.”

Instead, Christine and her young, growing family focused on other ways to make their holiday special.

“We made things for our loved ones, and we gave the gift of time because it was all that we had to give,” she explained. “I really do know what it’s like and how difficult that can be.”

If you find yourself in a similar situation, Christine suggests having a family get together to spend the holiday playing games and enjoying the company of your loved ones in lieu of buying presents.

“I know it’s a sacrifice for a lot of people to not give gifts, but, for my family, at least, that was a sacrifice we chose to make so that, long term, we could pay down our debt and become financially independent,” she said.”

Talk to your local banker

Still wondering how you’ll make ends meet this holiday season? Consider visiting your local bank and having a chat with one of our attentive bankers. They can help you pull together a budget, strategy, or savings plan to see you through the holiday season, the new year, and beyond.

“Everyone has a different stage of life. Everyone has different goals. And what someone might be willing to accomplish is completely different than another – we really just try to meet our clients where they are and find the solutions that are right for them,” Christine explained. “We’re always willing to talk to clients and help them find something that works and that will help them prosper.”