Obviously it is a bit too late for this year. But like anything in personal finance, planning is so important. This advice should also seem obvious but so many of us fail this.

One of the main reasons for thinking about next year now, you already have a good idea of what you spent. If you are like me and continuously track your spending you would know the amount spent each year. There are some instances where this number will change, a bigger than planned vacation, a larger gift, or maybe you did not have the money this year.

Whatever the reason you can still use an average spend to budget for next year.

Savings Buckets

My mother used to set up a Christmas Club account when we were younger. I had three brothers, Christmas was not a cheap situation for them. Especially as we got older and wanted more expensive things. If only I appreciated what I had and realized that my parents struggled for much of my childhood.

As I have become more involved with my finances I have come to appreciate the intangible things and have tried to pass that on to my wife and daughter. I would much rather take a holiday trip than get a new computer.

Christmas Clubs, while still a thing, are just another savings mechanism. While you do not have to set up a new account you can use buckets in online savings accounts such as Ally.

Calculate Your Average Spend

Take the average spend for maybe a three year period, calculate your monthly amount and put that into a bucket. It is really as simple as that.

Let’s say if you decide that you spent an average of $1000 on Christmas than that would amount to roughly $85 per month. Much more reasonable than spending $1000 in December. Round that up to $100 and it covers anything that may go up in price.

It might also be a good idea to budget for November. Most sales happen from mid-November to mid-December.

The good thing, if you are disciplined is you can use your credit cards to pay for the gifts and then pay it out of your budget.

Adjust it as Necessary

As you approach the holidays, especially if you have kids, you can still reevaluate your needs. If you realize you will be a few hundred dollars short then adjusting up.

If you don’t need as much, use the money to donate or if necessary move to another bucket. At the very least you could have a head start for next year.

This year we concentrated on paying down debt. I planned on using my paid-off credit cards to pay for gifts. It is extremely convenient to have the use without the penalty of interest.

Credit Cards Are Not Evil

Despite what many so-called personal finance gurus say, credit cards are not evil. And I say so-called gurus because credit cards if used correctly can be a great budgeting tool.

A card that gives two percent back on purchases will reward you for using it. This only becomes a negative if you do not pay the balance off in full each month.

My Costco card gives me four percent on gas, three percent on restaurants and travel, two percent on all purchases at Costco, and one percent on all other purchases. I also have an executive membership that gives me cash back on all Costco purchases. This year I have received $226.27, more than enough to cover the membership fees.

I can also cash in the check for money, but typically I use it to buy a gift during the holidays.

Give Back During the Holidays

I know in this year people are struggling. Even if you lost your job has put that money into a savings account at the beginning of the year can still help you.

You may not be able to buy that shiny new thing, but you can use that savings to at least try to have a good holiday. If you are like me and have done better financially this year, maybe also think about donating time and or money to a local food bank.

We also try to do Toys for Tots each year or donate jackets to the homeless. Having that savings also gives you peace of mind during a very stressful time. It allows us to help others since we are more able to help ourselves.

Start saving in January and you will be much more thankful in December.