The holiday season is a special time of year filled with joy, celebration, and connection. But while it brings plenty of warm memories, it can also come with a hefty price tag. If you’ve ever felt this financial pressure during the holidays, you’re not alone. Could a holiday savings account be the solution?
A holiday savings account is a simple, effective way to prepare for end-of-year spending. Rather than relying on credit cards or scrambling for cash, you can save gradually throughout the year and head into the season ready to relax and reflect. Let’s break down how a holiday savings account works, the benefits it offers, and how you can start one today.
What is a holiday savings account?
A holiday savings account is a specialized type of savings account that helps you save money specifically for holiday-related expenses. Most financial institutions offer these types of accounts with features designed to encourage steady saving, like the option to automate monthly deposits or restrict withdrawals until a certain date (usually in the fall).
Unlike your main savings or checking account, a holiday savings account is purpose-built. This separation makes it easier to track your progress and prevents you from accidentally spending your holiday funds on everyday expenses.
The benefits of a holiday savings account
Opening a holiday savings account can offer peace of mind and set you up for financial success during, perhaps, the busiest—and most expensive—time of year. Here’s how:
Encourages consistent saving habits
One of the hardest parts of saving is sticking to it. A holiday savings account gives you a dedicated space to save, increasing the likelihood you’ll reach your goal. You can set up automatic transfers to “pay yourself first” and build your fund little by little. Saving just $25 a week starting in January gives you $1,300 by December—enough to cover most holiday expenses with room to spare.
Keeps holiday spending separate from your main budget
Holiday expenses can blur the lines of your regular budget, causing confusion or overspending. A holiday savings account helps you stay organized by keeping these funds in their own place. That way, when it’s time to shop or travel, you know exactly how much you can afford to spend.
Helps avoid credit card debt
It’s all too easy to swipe your credit card to cover holiday costs and worry about it later. But those balances come with interest, and it can take months—or longer—to pay them off. By saving in advance, you reduce or eliminate the need for borrowing and protect your financial future.
Reduces financial stress and guilt
The holidays should be about celebrating with the people you love—not worrying about your finances. When you have a holiday savings account in place, you can approach the season with confidence, knowing you’ve prepared for it all year long. That means fewer money-related worries and more time enjoying the season.
Sets a habit you can carry forward
The best part? A holiday savings account doesn’t just help for one season—it builds a habit for every season. Once you’ve experienced how helpful it can be, you’ll be more likely to continue saving throughout the year, and not just for the holidays. You might even create similar accounts for vacations, back-to-school shopping, or big-ticket purchases.
How to start a holiday savings account
Setting up an account is simple and can usually be done online or at your bank. Here’s what to do:
Step 1: Choose the right account. Look for a savings account that has no monthly fees, offers a competitive interest rate, and allows for easy transfers from your checking account. Some institutions offer special holiday club accounts, which may come with limited access but encourage you to save more consistently.
Step 2: Set a savings goal. Estimate how much you typically spend during the holidays, including gifts, travel, decorations, food, and donations. Divide that number by the number of months (or weeks) until the holiday season begins to figure out how much to save each period.
For example, if you want to have $1,200 saved by mid-November, that’s about $100 per month if you start in January.
Step 3: Automate your savings. Make it easy on yourself by setting up an automatic transfer to your holiday savings account. Choose a consistent schedule—weekly, biweekly, or monthly—and stick with it. Even small amounts add up over time.
Step 4: Track your progress. Check in on your account regularly to see how you’re doing. Celebrate milestones along the way to stay motivated. If you fall behind, don’t panic—just adjust your plan to catch up. The key is consistency, not perfection.
Tips to grow your holiday savings faster
- Round up your purchases: Use apps or banking features that round up your purchases to the nearest dollar and deposit the difference into your holiday savings account.
- Cut back temporarily: Skip one weekly takeout meal or coffee run and move those savings into your account.
- Use windfalls wisely: Direct part of any tax refund, work bonus, or gift money toward your holiday fund.
- Sell unused items: Clean out your closet or garage and use the proceeds to boost your holiday savings.
The gift that keeps on giving
Instead of dreading your January credit card bill, imagine starting the new year with your finances intact, your gifts paid for, and no debt in sight. That’s the power of a holiday savings account. With a little planning, it turns a stressful time into one you can enjoy—confident that you’ve planned, saved, and set yourself up for success.
This article is for educational purposes only and is not intended to provide financial, tax or legal advice. You should consult a professional for specific advice. Best Egg is not responsible for the information contained in third-party sites cited or hyperlinked in this article. Best Egg is not responsible for, and does not provide or endorse third party products, services or other third-party content.
