How to Start a Sinking Fund for Next Christmas
A Christmas sinking fund spreads holiday spending across the whole year so December doesn't land on a credit card. Start by adding up what you actually spent this year on gifts, food, travel, decorations and events. That total, adjusted for anything you want to change, is your target. Divide it by the number of paychecks or months left until next December and save that amount automatically into a separate account or a labeled category. Small, regular transfers are easier to keep up than trying to catch up in the fall.
Practical tips
- Total this year's holiday spending from bank and card statements.
- Split the target into categories: gifts, food, travel, decor, events.
- Divide the target by remaining paychecks to get a per-paycheck amount.
- Set up an automatic transfer on payday into a separate savings account.
- Track the balance monthly so you can adjust if costs change.
- Add windfalls like rebates or a small bonus to catch up if you fall behind.
- In November, spend from the fund and stop when a category runs out.
Free calculator
Try the Sinking Fund Calculator with your own numbers.
Frequently asked questions
When should I start a Christmas sinking fund?
January gives the most months to spread the cost, but any month works; just divide by the months left.
Where should I keep the money?
A separate savings account or a clearly labeled category so it isn't spent on other things.
What if I can't save the full amount?
Save what you can and lower the target in the categories that matter least.