No, it's not too early to start saving for the holidays
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Why is it never too early to start planning your holiday budget?
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You're listening to Life Kit. I'm Mariel Cigarra. Now, if I'm you, maybe I'm thinking budgeting for the holidays. It's a little early, don't you think? The pumpkins and the skeletons haven't even come out yet. But when I asked this very question to accredited financial counselor Bethel Hapti, she said a hard
no. It's always a good time to think about future spending, especially because you can do a lot more when you have more time. Let
me
just set a goal
here for us. Knowing what we know about credit card debt, how high those interest rates are, how the debt can snowball, let's plan ahead so we don't accumulate debt in December that we'll have to pay off in 2027.
That is the ideal scenario, is that the money that you're spending is just the money that you're spending instead of the money you're spending plus interest to credit card companies in January and February.
On this episode of Life Kit, how to create a holiday spending plan now. Starting with takeaway one, get a baseline. Bethel says a lot of the people she talks to don't actually know how much money they bring home every month after taxes and health insurance premiums and retirement contributions. So that's the first number you want to know. pot of money
per month. And then I think even fewer people beyond that know the amount that they need to run their life, rent, transportation, those fixed expenses, but also those variable expenses that are pretty consistently high and necessary. daycare, groceries.
Also include any debt payments. And that's your second number, the bare minimum you spend on necessities. Then you're going to do the math, the big pot of money minus the second number. Okay, what's
left? That's the number that you'll be able to use for your fund spending, discretionary spending in the month, or that's the money that will go towards savings. So creating even that rough and tumble baseline budget is really important. Now, you've got about
three months, a little more, to save up for the holidays. So multiply that number by three. That's how much you're working with. And that's how much you can afford to budget for holiday expenses, including travel, gifts, seasonal activities, you know, a little sleigh ride, and hosting gatherings. It's a bit of an overestimate, though, because you also need to consider the non-necessities that you're already spending money on. You probably don't want to skip out on everything that's fun for three months just to ball out over the holidays, but maybe you do. That is up to you. Now let's get a little more information by doing a retrospective. Look back at your credit card and bank statements and figure out how much money you spent on the holidays last year.
Can you afford to spend that much again without taking on debt? Also consider what did you spend the money on? And how do you feel now about having spent money on those things?
How happy were you with those purchases? Like, were those expenditures actually aligned with how you want to spend in the holiday season?
Okay, takeaway two, spread out your holiday expenses. As we talked about, one way to do this is to start saving money now that you can use on holiday gifts and travel and events come late November, December. If you're currently setting aside money in a savings account, you might just label some of it differently. You know, this is for holiday spending. Chidozi Ibubuchi is a financial therapist and gave us this advice in an episode about saving up for big events like a friend's wedding.
Maybe it could be 50 bucks a week or 50 bucks a month. That adds up to how much you think you may spend. And that's a really cool automatic way to start saving towards these expenses.
You can also look at your discretionary spending and cut back so you can save more. Maybe you don't book the expensive weekend trip this fall or you do yoga at home with YouTube videos rather than going to classes.
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Chapters
4 chapters
1
Why is it never too early to start planning your holiday budget?
0:00–7:15
2
How do I calculate my monthly take‑home pay and essential expenses?
7:15–15:07
3
What can a retrospective of last year’s holiday spending reveal?
15:07–17:53
4
How can I spread out holiday expenses to avoid December debt?
17:53–19:49
Speakers
7 identifiedMore from Life Kit
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