Benefits of Saving for a Gift
How to get a head start on saving to buy a gift
Starting a holiday savings account is an effective way to save for gifts throughout the year. Saving for a gift or big purchase can be significantly easier on your personal finances. If you set aside money in a savings account to buy a gift, you'll earn valuable interest. That means you'll have a little more to spend when it's time to make your purchase. Saving for a gift can also reduce your stress, especially during the holiday shopping season.
But gift-giving isn't limited to the holidays. People dip into their pockets year-round to buy presents for birthdays, weddings and other events. Saving for gifts throughout the year will help ensure you are always prepared for these special occasions.
Tips on saving for a gift
Begin the process by making a list of people you expect to buy a present for in the next year. Then, estimate how much you'll need to save for a gift for each person. It may be helpful to look at how much you spent last year. For a milestone occasion, such as a wedding or graduation, you may want to consider saving enough for a big gift.
Once you see the numbers on paper, you may want to make some adjustments. If you need to reduce your spending on gifts, ask yourself the following questions:
- Should I buy presents for fewer people?
- Should I pay less for each present, or at least less for some of them?
- Should I consider making gifts for certain people rather than buying them?
- Should I reduce spending in another category so I can save more for a gift?
- Should I consider a getting part-time job to help with saving for a gift?
Once you've worked through these questions, calculate the total amount you need to save for gifts this year. Then, determine how much you'll need to save for gifts each month. If you are including January in your holiday spending, take the amount you've decided to save for holiday gifts and divide it by 12. This calculation will tell you how much you should put in your savings account for gifts each month. For example, if you plan to spend $240 on gifts during the holiday season, you should save at least $20 a month.
If you are saving to buy a gift for a wedding that's in three months, you'll need to divide the amount you plan to spend on the gift by three. To save for a gift that costs $120, you'll need to put aside approximately $40 per month.
If you'll be making regular withdrawals from your account to purchase gifts, you'll probably want to keep your funds in a liquid account, such as a money market account or regular savings account.
Citizens Bank has options to help you with saving for a gift or big purchase
If you enjoy showering your friends and family with gifts or want to do a better job budgeting throughout the year, Citizens Bank can help you set aside money to support your generosity. Our savings and money market accounts are designed to meet your needs. Open a savings account online today. Or, for more information, speak with a Citizens Bank representative at 1-877-360-2472.