There’s nothing like the joy of holiday shopping fever — where you can comfortably buy all of the decorations you want, participate in all your favorite holiday activities and splurge on gifts for your loved ones.
Being able to do all of that and simultaneously save money for an emergency fund seems like a far-fetched fantasy.
But it’s not impossible, according to Dennis Shirshikov, head of growth at Summer and a professor of economics at the City University of New York.
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Below are some expert-backed tips for saving money and building your 2025 emergency fund during the holidays.
Prioritize Essential Holiday Spending
The holidays often come with a flurry of expenses, but it’s important to differentiate between “must-haves” and “nice-to-haves.”
“A key strategy to balance holiday spending with saving is to establish a budget early on,” Shirshikov said. “Allocate a set amount for gifts, travel and festivities, but be ruthless about cutting back on nonessentials.”
For example, he said you might opt for smaller, more meaningful gifts or make DIY items for loved ones.
“By controlling your discretionary spending, you create room to funnel more money toward your emergency fund without sacrificing the joy of the season,” he said.
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Set Up Automatic Transfers to Your Emergency Fund
One of the best ways to ensure your emergency fund grows is to make it automatic.
“Even during the holiday season, set up a weekly or biweekly transfer to a separate savings account specifically designated for emergencies,” Shirshikov said.
He explained it doesn’t have to be a large amount. Even $20 to $50 per paycheck can add up over time.
“By automating the process, you remove the temptation to dip into the money for holiday expenses, ensuring your fund steadily builds into 2025,” he said.
Leverage Holiday Bonuses and Windfalls
Many people receive year-end bonuses, cash gifts or holiday overtime. Shirshikov said this is a prime opportunity to give your emergency fund a substantial boost.
“Rather than spending your entire bonus on holiday-related expenses, allocate a portion — ideally 30% to 50% — directly to your savings,” he said.
For instance, if you receive a $1,000 bonus, putting $300 to $500 into your emergency fund will set you up for financial stability heading into the new year.
Separate Funds To Avoid Overspending
To manage both holiday spending and emergency savings, it’s critical to separate your funds.
Shirshikov advised keeping your emergency savings in a high-yield savings account that’s harder to access. Meanwhile, use a different account or even cash envelopes for holiday-related expenses.
“This separation prevents overspending on holiday purchases from cutting into your financial safety net and ensures you’re consciously aware of how much you’re spending in each category,” he explained.
Review and Cut Recurring Expenses
According to Shirshikov, the end of the year is a great time to audit your finances and cut any unnecessary recurring expenses.
“Cancel unused subscriptions, negotiate lower rates on bills like insurance or phone plans, and take advantage of holiday sales for larger purchases you may need to make in 2025,” he said. “Every dollar saved here can go directly into your emergency fund, helping you meet your goals faster.”
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This article originally appeared on GOBankingRates.com: 5 Tips To Help You Build Your 2025 Emergency Fund During the Holidays
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