How to Build up a Holiday Fund

By Program Coordinator, Jerevie Canlas

November 10, 2020

holiday fund jar

You know it’s coming. It’s inevitable. Even if it looks a little different this year because of the impacts of COVID-19, you still can’t escape the fact that as soon as the Fall season rolls around, our minds go straight to planning for the holidays. Halloween, Thanksgiving, Christmas, Hanukah, New Year. These are not one-day events. The months of October through January can feel like a never-ending season of festivities – all of which involve money. You know, the trip (or two) to the corn maze, the costumes, the pumpkins, the extra candy, the gifts, the donations, the trip, the extra food, the decorations, the fireworks – ALL. THE. THINGS. So what kind of financial preparation can you do for these irregular yet expected expenses and avoid starting the new year in a financial rut?


The most important thing you can do financially is to plan and incorporate your holiday budget into your monthly budget. Evaluate what you think you’ll spend on the major holidays throughout the year, including birthday and anniversaries if you wish. It’s the same principle you would use for allocating funds towards your non-monthly expenses such as oil changes or car registration. Add up those amounts, even if they’re just estimates, and divide that amount by 12 – this is your baseline for what you need to set aside each month in a revolving savings account to cover for holiday and/or special occasion expenses.


Building upon this principle, here are some things you can do to build up your holiday fund:

  1.     Set out a goal and intentionally create a savings fund for it. Consider creating a 1% fund, where 1% of your income is automatically set aside for this particular spending goal. You won’t even feel this amount being put away, and the next thing you know you have enough money to cover for this particular spending category. Sure, you can put away more than 1%, but this gives you a start and you can change this allocation as your financial circumstances allow.
  1.     Set realistic expectations. Sure, you want to fill your porch with pumpkins and hay bales and cornstalks. Wouldn’t it be awesome if you gifted everyone on your street a holiday gift bag? Can you afford it though? It is ok to dream big, but realistically prune them by reevaluating where you can slash expenses to make room for extra money that can go towards your holiday fund. Consider using the step-down principle and explore alternative ways to afford something without breaking the bank. 
  1.     Consider generating extra income when possible. Having a side hustle might not necessarily bring in the big bucks, but $5 is better than $0. Consider holding a yard sale and get cash for your clutter. Maybe you have craft skills that can become generating project for you and your family? Consider selling your products at the local farmer’s market or in the virtual marketplace. Think of all the ways you can earn extra income and designate this income to go towards a certain spending category such as a holiday fund. 
  1.     Create a holiday budget – and stick to it. Remember that holiday fund you’ve been incorporating into your monthly budget? When there’s money in the pot, you might be tempted to use it all up. Doing that is counterproductive to the idea of “building” a holiday fund. If you have money left in your holiday budget, roll that extra amount over to your savings fund. Now you just “used up” all of your allocation and each dollar in your budget had a job to do.
  1.     Build a spending plan. Using a spending plan such as this one helps you create a roadmap for how you are going to spend your money. Using a spending plan will allow you to rethink how much you’re spending on certain items and consider slashing those costs. When you cut costs, you get a surplus; and that surplus can be saved away in your revolving savings fund. USU Extension has a program called PowerPay that will help you create either a basic or extended spending plan while giving you a guideline as to how much of your income should be allocated for a specific spending category. Visit for more information or consider taking the PowerPay Money Master Online course(fee waiver available here) to learn more about how to build a spending plan that you can stick to. 


The holiday season is a time for celebrating, and while celebrations are usually synonymous with spending, there are ways to spend without having to regret the way you celebrated. This holiday season, having financial freedom and peace of mind might just be the best gift you ever got.


  • Cromwell, S. (2012). Reduce stress during the holidays: Tips for controlling holiday spending.

          Utah State University Extension.

  • Utah State University Extension. (2017, November 2). Beware of holiday budget busters [Family Finance]. Retrieved October 20, 2020 from
  • Utah State University Extension. (2016, March 4). Finance pro tip: Christmas is not an emergency [Family Finance]. Retrieved October 20, 2020 from
  • Utah State University Extension. (2016, March 10). How to create a 1% fund [Family Finance]. Retrieved October 20, 2020 from