Say what?! Yes, you can pay for Christmas gifts with Pre-Tax Money. I know, I know. It’s in the semantics, but if other strategies haven’t worked for you, this one might.

Have you filed for your Flexible/Health Spending Account reimbursement yet for the year, by the way? Have you earmarked that money yet? Let me explain.

Open Season is generally around November, so be sure to sign up for this awesome tool to save money and you could have Christmas money saved up for next year with little effort.

• If traditional Christmas Savings Accounts tend to get raided after you save only a few hundred dollars, Strategy 2 may be for you.
• If you tend to put all your holiday shopping on credit cards (and then cry in January), you might try Strategy 3.
• Or if you’re very disciplined in paying your bills, but wonder where the money for “extra” stuff could come from, consider Strategy 1 for re-directing that pre-tax money toward your savings goal.

Even if your employer does not offer a Flexible Spending Account (FSA) for dependent care or healthcare, you can look for a Health Savings Account just like you can seek out Individual Retirement Accounts (IRAs) or Insurance Coverage at many large institutions. You can start your search at https://www.hsasearch.com/.

Stay with me.

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There are a few ways you can go about paying for the extras at the holidays and your best strategy is to stay true to your normal shopping M.O. It’s much easier when there is less change involved.

 Strategy 1 : Reimburse Early & Regularly, and Then Shop Throughout the Year.

If you like to shop throughout the year like I do, picking up stocking stuffers and other gifts from the clearance tables, you can save a lot over buying everything in December. For this strategy, I like to have my money up-front so it doesn’t eat into my regular monthly budget. This means I schedule surgeries, dental procedures, annual checkups and the like at the beginning of the year, so I can file for reimbursement and get those checks by spring.

An extra bonus of doing it this way is that there is greater flexibility in scheduling with your physician in the early months versus the end of the year when everyone is trying to spend the rest of their Flexible Spending Account or Health Savings Account money before they lose it, not considering the three month grace period following the beginning of the year that most companies allow.

 Strategy 2: Save Your Reimbursement Request(s) for November; Have Cash for Late November + December shopping.

If you maybe aren’t quite so disciplined and will spend money if you see you have it, then you will want to make sure the money isn’t easily accessible during the year. You can keep a medical expenses folder (just like your Taxes folder) and file for reimbursement in early November for all prior months.

Your reimbursement check will probably come in time for Black Friday shopping deals and you could pay cash! Cash! Wouldn’t that be awesome? You could also put the money on a prepaid card and use it to buy holiday gifts. With a prepaid card, you wouldn’t run the risk of going over budget. Wouldn’t that feel good?

 Strategy 3: Use Credit Card for Rewards, File for Reimbursement after Christmas, Pay Bill in January.

If you can shop and stay ON BUDGET, you could do all of your shopping in December on one credit card, and then file for your year’s medical reimbursements, which should arrive in time to make the credit card payment.

There is a risk of your medical reimbursement not being fully paid, say, if you omitted some critical documentation, but usually they’re good about sending a partial reimbursement if they can’t approve the entire amount immediately. Not a big deal. You just submit again with the right documentation and wait for your money. So you might pay three weeks worth of interest. That’s way less than you would have paid, had you gone about paying for the holidays without a plan…you know, like last year??? I’m totally giving you the interrogation eyebrow right now.

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Personally, I keep my shopping list in my day-planner, which comes with me everywhere. When I run up on a clearance table with some spectacular deals, I can pull out my shopping list to see if any of the items on sale could match up with a potential recipient who would be super-pumped to receive the item.

Also, by notating what gifts I purchase, I can avoid buying six radio-control cars for my nephew and potentially omitting my niece! Of course, if no one would like to receive your finds as a gift, you will save even more money by completely bypassing the table entirely. It’s always good, I think, to be on the lookout though for an opportunity to save some cash.

Of course, this strategy will NOT work unless you have a Christmas budget made. Do you know how much you intend to spend for the holidays this year?

This strategy could be used alternatively to help you pay down debt or save up for a small-to-midsized personal goal.

Yes, you eat the medical costs into your annual budget, but by earmarking the reimbursement funds for a particular goal, you can achieve it just by . I’ve personally used this strategy for years so I could get a jumpstart on shopping for Christmas.

As much as I love seeing how low a percentage my “Paid” versus “Value” column is, my favorite part is not paying full price. (RIGHT?! Who doesn’t like saving money?)

In 2010, I was single and couponing like a BOSS. It was how I spent every weekend, hopping from store to store, cherry-picking the best deals from their loss leaders. I purchased $1,600.00 worth of goods for $400.00. I gifted beyond my regular shopping list–Aunts & Uncles, Cousins, even the UPS and FedEx deliverymen got loaded down with gifts! Most of the gift bags contained about $80.00 worth of personal goods, toiletries, & gum/candies, but I had less than $8.00 invested in them. It made me so happy to surprise everyone.

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BONUS: Every dollar you come in UNDER budget is still yours to spend or save as you please. So, what are you going to do with your  *extra* money?

Say your budget is $1,200 and you spend $1,046.00 on the holiday gifts, food preparations, postage & travel for this year. Here are some ideas for that remaining $154.00:

1. A massage and a pedicure for all your hard work saving money! Maybe even a haircut and a cannoli.
2. A relaxing lunch with the gang during a hectic holiday season.
3. After Christmas bounty shopping – Stock up on wrapping paper, bows, candy, & other holiday themed goods.
4. Use it to make an extra principal payment on student loan debt or your mortgage.
5. Splurge on something for the family–a night at the movies with the large soda and buckets of popcorn or all eighteen holes at the glow-in-the-dark putt-putt golf place and dinner at that place with the singing rats. You know the one. It’s not all about you, baby.
6. Use it toward unexpected gifts to be purchased in the new year.
7. Get started on NEXT YEAR’s Christmas Shopping.

Ohhh, yeah! I tend to lean toward #1 and #3 with any remaining funds. That’s how I pay for the Holidays with Pre-Tax money. How do you swing that extra end-of-the-year spend? Tell me at Erica@owningburtonfarm.com or in the comments below.

~Erica

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