Pondering Christmas in July is a good idea if it gets you saving.

The average American spent about $1,000 on winter holiday-related expenses in 2022, according to the National Retail Federation (NRF). Despite the significant outlay, many consumers forget to plan for these annual costs and instead charge them to credit cards.

If you charge $1,000 and pay only the minimum 2% balance, at an 18% annual percentage rate, it will take you 12 years to pay it off. And by the time you do, you will have spent $2,353. Now imagine what would happen if you did this every year.

Here’s a better alternative—spend the next five months planning for the holidays. Here are five ways to save $1,000:

• Tighten your everyday spending with the goal of saving about $1 a day between now and Dec. 25. This could easily net you $150.
• Adjust your W-4 to accurately reflect what you owe in taxes. Use the IRS website to check your withholding amount. The average tax return is $2,753, but that money doesn’t arrive until April. By taking less out of each paycheck, you can save that money for the holidays.
• Cut back on monthly expenses that aren’t fixed. Aim to spend $10 less every month on categories like gas, food, and entertainment.
• Sell unused items. Sell clothes, furniture, kitchen ware, etc., at a garage sale or at consignment shops.
• Open a holiday savings account. Don’t use existing accounts because you could too easily spend that money on other items.

Consider this: If you’re still paying for last year’s holiday expenses in July, reconsider your gift giving for this year. It makes no financial sense to add to your existing debt. Remember that kindness and happy shared experiences are meaningful substitutes for purchased gifts and are remembered long after the wrapping paper has been thrown out.