Stop buying Christmas presents and do this instead…

Christmas will be here before any of us are ready for it. But there’s one thing you need to make sure you have in place BEFORE you do any Christmas shopping. Serious. Don’t do ANY Christmas shopping until you have this…

A Starter Emergency Fund. 

If you don’t yet have at least a Starter Emergency Fund of one month’s worth of living expenses, you need to build that up before heading to the stores on Black Friday. I know I’m suggesting you avoid buying anything for Christmas until you get that Starter Emergency Fund built up, and that’s a hard pill to swallow. 

But trust me. There’s nothing you could buy and put under the tree that would be more important to your family than getting to start the New Year off in a better financial position. 

Why an emergency fund is non-negotiable. 

Your Emergency Fund is your safety net against life because guess what? Life will happen. You’ve been alive long enough that I don’t have to sell you on that fact. It’s not a matter of if life will happen. It’s a matter of when. That’s why you need to build a solid foundation for your finances. And your Emergency Fund needs to take precedence over anything and everything else financially related. That’s not to say that it’ll be a priority forever because once it’s funded, you can move on to other things. 

But if you don’t have a Starter Emergency Fund, you need to make that a priority to save up before the end of the year. 

What is a Starter Emergency Fund?

A Starter Emergency Fund is one month’s worth of living expenses saved in a high-yield savings account. To figure out how much you need to live on every month, list out all of your expenses. Rent/mortgage, groceries, fuel for car(s), insurance, debt payments, utility payments, phone payments, tuition, streaming services, and anything you would still need to pay for if you were to lose your job. Tally it up and use that number as your savings goal number. 

Let’s break it down.

So let’s say, for example, that the number you come up with is $4,500 – that’s how much you need to survive one month without income and still meet your household’s most essential needs. To meet this goal in three months, you’d have to save $1,500 a month. I know that sounds steep, especially if you’re already feeling strapped for cash, so here’s how to make this actually work:

1. Track all of your expenses for 30 days and spend nothing that you don’t absolutely need to buy – no impulse shopping. 
2. Reduce your expenses by looking into lowering your insurance rates, cutting out streaming services, changing cell phone providers (this is one we use and love), canceling subscriptions, etc. Get ruthless with cutting and eliminating. The more you cut, the faster you can achieve your savings goal.
3. Look to increase income. Side hustles, working a second shift, selling off things you don’t need, taking advantage of cashback apps like Upside, selling things you make (did you know you can even sell off landscape photography if you’ve got some quality photos that you took on vacation!). 
4. Make a survival budget. Even if you aren’t worried about losing your job, having a “survival budget” in place will help you know exactly how much you need to have in savings in order to survive. 

Why $1,000 isn’t enough.

I know that everyone talks about how most Americans don’t even have a $1,000 saved for an Emergency Fund and how $1,000 should be your starting point. I disagree only because if you’ve got a mortgage, chances are it’s more than a $1,000 payment. If you’ve got student loans, chances are it’s probably close, if not over $1,000 a month. Heck, many families are struggling to feed their families for less than $1,000 a month! 

That’s why I say that a $1,000 Starter Emergency Fund is simply not enough money. I want your family to start the New Year off on better footing, which is why I recommend building up to one month’s worth of living expenses saved. 

But what about Christmas?

I know I’m suggesting you not buy anything for Christmas without having a Starter Emergency Fund, and that’s difficult to accept. I get it. I’m a mom of three kids. Trust me, I understand. But here’s the thing – the most important part of Christmas is not the gifts under the tree. It’s Christ. Can you honestly tell me that you remember every.single.gift you’ve ever received for Christmas? I know I can’t. And guess what? Your kids won’t remember every gift either. 

As parents, we put way too much pressure on ourselves to “level up” each year to buy bigger and better and to make it more magical. But we’re killing ourselves! Our kids don’t need that! They need us – so let’s spend more time with our kiddos this Christmas. Chances are this Christmas without gifts, but time well spent will be one they remember forever. 

How to save for Christmas NEXT year.

I know it’s too late to save up a significant amount for Christmas this year in a  Sinking Fund, but it’s not too late for next year. If you don’t already have a Christmas Sinking Fund set up (a separate bank account – we like ours to be a separate checking account), then go ahead and do that this year. Then, once you’ve saved up your Starter Emergency Fund, start contributing $20 every paycheck to that Christmas fund and let it build all year long. That way, next year’s Christmas, you’ll have an Emergency Fund AND money set aside ready to go for Christmas. You’ll get to avoid starting the New Year off in debt and still make a meaningful Christmas! 

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