by Adam Dawson
A few days ago, Emily suggested setting up a Christmas Club account with the bank to save money over the course of the year for Christmas. I had almost a strong negative reaction to the suggestion in my head before I was able to take a deep breath and think it through.
I realized that her suggestion evoked my childhood memories of my family being broke all the time. I know my parents did Christmas club one year and I just remember the feeling that we wouldn’t have money for Christmas if we didn’t do this special program. It’s a bit fuzzy, but I also seem to remember my parents raiding the Christmas Club account one time when things got hard. So my baggage about this really stems from the idea that this is a program for poor people who can’t afford Christmas and can’t manage their money well enough to save on their own.
After that reflection and a few moments to restore my normal heart rate, I’m trying to be open to Emily’s suggestion. So I’m polling the audience. Do you do a Christmas club-type savings program for your holiday spending? How much do you save and how often?
I sure do. I don’t actually belong to a “Christmas Club” type of account, but I have many many sub-accounts at online banks that I set up automatic deposits to for things like Christmas, birthdays, annual vacation, tuition, car insurance bills, flood insurance, homeowners insurance, life insurance, property taxes, replacement car account – all those things that come around and one tends to think, “Oh, do I have money for this?”
Some of them are done through my paycheck, some of them I do manually.
Basically it leaves me d@mn near broke on the average day after everything is taken care of (I give myself about $20 “play money” each week), but then I have plenty of money for all my obligations and for fun times on birthdays, holidays, vacation.
We also funded our emergency account this way. When the money comes right out of your paycheck, you get used to that amount and you don’t miss the money. In fact, now if/when I get a raise, I up my generic savings account by the amount of my raise – so my take home pay doesn’t get any bigger, but my savings account does.
We do and love it! We enjoy buying since we know the money spent on gifts is not meant for anything else! We a lot $35 a pay check over 26 pay periods.
i like this idea of peace of mind, not stressing about how else that money should be used.
We do too. This Christmas taught us a valuable lesson – paychecks can be slimmer over the holidays when your spouse has a demand-based job. Having some money earmarked to pay for some little extras is a nice way to enjoy the time, without being worried about being able to pay for every day expenses.
We have an automatic payment come out of our account the same day our paychecks hit. $30 every two weeks goes to an online account specifically for this purpose. It’s hard to get to/transfer out of without notice, so the possibility of pre-christmas raiding will be lessened.
$30 every two weeks for approximately 22 weeks (you’ll need to spend prior to Xmas) is $660. Not bad, really.
yes, I’m lucky that my income is steady all year but the holiday season can be demanding financially.
My mom opened Christmas Clubs for each of us (4) kids every year. I can’t remember when I stopped doing one as an adult but I started one this year. Not an “official” club but one of my savings accounts will be used for it. And I do something similar to Susan for my other bills.
While not an official Christmas Club, I also have a checking account that I save to automatically each month. The account is for birthdays, Christmas and any other gift giving event (wedding, baby shower, kids’ parties, etc.). Because I have 3 kids and put away for all gift giving events, I put away more per month -$135/month- but when it can cover all those things, it is great! It is a great way to prevent yourself from blowing your monthly budget in November/December and it also forces you to create a gift budget a stick to it. Double bonus!
Yes! We’ve done one for years. $50 a pay check saves $1,300 by the holidays…..covers gifts, Christmas tree, cards, parties, holiday food, etc for 8 of us….it’s a blessing to have that peace of mind!
Maybe try it this year and see how you feel?
i like the idea of giving it a shot.
Absolutely! We don’t have an account officially called a “Christmas Club” but we do have a separate account at our credit union that they call a “Vacation Fund.” We use this account to save for irregular expenses (expenses that don’t happen monthly, but you know are going to happen) We take out 50 dollars a month on an automatic draft for Christmas to this separate account. We also take 50 dollars for gifts throughout the year (weddings, birthdays); 50 dollars a month for car insurance, which we pay in 6 month increments, and another 50 goes towards routine medical expenses (dentist cleanings, yearly check up, prescriptions).
I can tell you it makes a huge difference for peace of mind. In 2012, I didn’t do this and I ran out of money last December when paying for holiday gifts, holiday travel, and 6 months of car insurance. In 2013, I simply transferred the money from the “Holiday” account to the savings account with complete peace of mind.
We don’t have a separate Christmas fund but that doesn’t sound like a bad idea. Why not try using the 52 weeks of savings challenge and apply that as your Christmas fund? In the end, you should have $1,378 but Christmas comes before the end of the challenge and I’m sure you have to go shopping at least a month before Christmas. Instead of adding a $1.00 every week, try adding $2.00.
We use an “ING” (now Cap One 360) as our savings plan. We put $100 in per payperiod. The first half of the year is savings for Camp for the kids (about $1000), and the rest is for Christmas.
Works for us!
I wonder if we have that here in this country but it seems like a good idea. After all, it is a way of budgeting, right?
We don’t have a separate Christmas account, but we put $75/month toward it in an account we have for annual bills. It’s like having a personal escrow account, and that way the money is already set aside for auto & life insurance, personal property tax for cars and homeowners association dues. As the bills come due throughout the year, I’m able to pay most of them with a credit card to get extra points. Then I transfer money to the checking account to pay off the card. In November, I transfer $900 to our checking account to take care of most of Christmas expenses, and we pocket what we don’t spend or pay for the rest out of current income.
This is a good reminder for me to check the balance–I need to increase the monthly transfer because our younger daughter will be added as a driver later this year. Ouch! But at least the money will be there when the bill arrives.
I say why not? We do an analogous thing for our annual expenses which tend to be high right at the beginning of the year — think house insurance, auto insurance, etc, etc. We pay all of these off in a lump sum at the beginning of the year because I can’t stand keeping track of additional monthly payments and I have a huge distaste for “installment fees”.
Conveniently, the way I’ve done it the last few years is to use our “Dependent Savings Account” which puts away some savings each month. In January, we submit our eligible child-care expenses and get reimbursed this money. Since the money has psychologically long been written off, it’s almost like getting a bonus check for me. Unfortunately, a bonus check which immediately gets taken away and used to pay these annual bills, but still better than paying the bills out of the normal checking account balance!
Anyway, to cut to the chase, I say just try this “focused saving” approach for the year and see if it works? If nothing else, it will be educational and will provide material for a follow-up blog post next December. 🙂
Yep, I also hate the installment fees. We don’t have dependents but I agree with you that it might feel like a bonus check at payout.
I am sorry to hear that a Christmas Club brought up bad memories for you Adam. I think putting money aside for holiday spending or vacations or a large purchase is wise if you have lots of money or very little money – that way when it comes around you aren’t tempted to charge things you can’t afford. Also, I think working together as a married couple on financial goals – even if they are Christmas gifts or vacations – helps build the relationship.
My husband and I save money in an envelope throughout the year for Christmas gifts, but we only buy gifts for our parents and send Christmas cards to everyone else. At this point in our relationship we just cannot afford to buy everyone in our very large extended family a gift without going into debt. We do go above and beyond for our Christmas cards, however 😉
Hahaha premium Christmas cards. Yes, I’m sure the memories are tied up with other memories to give me that association. I agree that saving money regularly is not a “poor” habit.
I don’t have one, only because my Christmas expenses are relatively low. I don’t travel, and I only buy gifts for immediate family members. My parents always had a separate Christmas savings account growing up. I think it helps in making a consistent monthly budget if you will have sizeable Christmas expenses- otherwise your budget for November and December would be a lot different.
Yes, we do and I love it. I have 40 taken out per paycheck and it goes into a Christmas Club account which earns interest. It is wonderful to have the money for Christmas set aside. I have done it both w and w/o a savings plan and most definitely prefer the peace of the plan. I also have another automatic account set up for other expenses such as taxes, heating oil and insurances. All taken out automatically and set aside to cover those expenses. Christmas clubs are not for “poor” people but are meant to keep people from becoming “poor” over Christmas :-).
I, like Susan, have a sub-account in my online savings account. We deposit $100/month. That covers not only gifts but our travel expenses (we travel to another state every year to celebrate with my family).
I’ve never heard of this as a “thing” – had to Google it – but I do the basic idea: I have an ING sub account set up named “Christmas” and I put $40 per paycheque into it. Saves about $1000 over the year which is very helpful (I fly home for the holidays). I don’t see why it’s any different than any other targeted savings account? (I have one for travel, for Christmas, and for our bimonthly power bill).
It’s a good idea to save some $$ each paycheck for Christmas cause it’s an expense you know is going to be coming up and you don’t want to be short and have to start putting it on credit cards or raiding your emergency fund to cover it.
Just multiply how many people your planning on buying presents for by how much you want to spend per person and divide by 12. I also add in a little extra in case I spend a little more for a present or two or if we have to get an emergency present.
But if you plan carefully and have an emergency fund in place, you shouldn’t have to raid your Christmas fund for the extra cash.
For the love of Mike just do it! Having extra money set aside is a bad thing? Thank goodness men don’t bear children. There would be nobody on the planet. Love the blog by the way.
This is such a great idea, why not try it? We actually max out on the Social Security deduction around Sept or Oct, so they stop taking it out of our paycheck. This gives over $800 a month extra that we put aside for Christmas expenses and what we don’t use goes into savings. By January 15th, we’re back to having the deduction again, since we get paid twice a month, and we don’t go into shock.
We don’t do a Christmas Club or similar account, but my side of the family is small (only gifts for mom, dad, and grandma) so it’s not a huge chunk of money over Nov/Dec. My husband’s family, however, is giant — his mother has three sisters who are all very close and they all have children (and my sister-in-law had baby #1 of the next generation a couple years ago), so that comes out to about 20 people right now. Fortunately, they instituted a “stocking-stuffers only for adults” rule to help lower the amount everyone is spending! This is very helpful because Christmas also usually involves some travel, as the family is spread out in CA, TX, and AR. So I look for those small gifts throughout the year, so it spreads out the cost over several months, and this last year my husband made soap that we gave as gifts as well. Soap-making is one of his hobbies and it was very economical — around $5.00 or less per person. The only person we splurged on was our niece, and thanks to great deals on Amazon, that was only about $35. Other folks in large families who are feeling the pinch may want to broach the subject of having a spending limit per gift, doing a gift exchange, or doing small, affordable items among the adults to save money.
I also wanted to tell you, Adam, that I am right there with you when you talk about having what I call “money baggage”. One of the bigger pieces of baggage I’ve been carrying around, and which is one of the hardest to put down, are my ingrained beliefs about Christmas and gift-giving. From a pretty young age I was aware that Christmas was a burden on my parents and became pretty anxious around the whole issue of gifting, which definitely sabotaged several Christmases for me over the last 10+ years. Freaking out about whether we got enough presents for everyone, and whether everyone was going to feel equally loved through receiving material possessions, etc. really ruins the holiday spirit for me — go figure! I recently read a post on cracked.com that so completely hit the nail on the head for me: http://www.cracked.com/blog/the-5-stupidest-habits-you-develop-growing-up-poor/ — if you haven’t come across it yet, it’s worth a read.
Hilary, thanks for this. Hilariously, the post you linked is blocked at work for “Mature Humor.” I’ll have to check it out when I’m at home, the title definitely intrigues me.
We often focus on home-made, or thrift store gifts in our family, for those family members we think will appreciate it. There are so many gift-lovers in our family that sometimes a goodwill find or hand made trinket won’t do. Anyway, I am intrigued by your soap-making. We have a goat that will hopefully kid this year and go into milk so I wonder if we can be the goat-milk-soap-giving people. Are there any resources you’d recommend?
Ha so funny that cracked.com is blocked at work — they do post some risque stuff sometimes, I guess! It’s a really good article though.
My husband would be soooo jealous to hear you have a goat, he has been talking about the “someday” when we have some acreage and can have some goats and/or a cow! You can definitely make goat’s milk soap, and we have in the past, from his aunt and uncle’s goats’ milk. It imparts a kind of an orange-y color to the soap, which I like. He likes http://www.brambleberry.com/ for their blog (soapqueen.com) and supplies. The blog has great tutorials for a range of interests and skill levels. He also prefers soapcalc.net for creating the recipes. If you’re wanting to make goat’s milk soap, you’ll be doing what’s known as “hot process” soapmaking, so you could search for information and tutorials on that. Enjoy!
I did this for the first time this year. Funny, for me it was so important because I remember being a kid and knowing we couldn’t afford presents, which made it hard for me to ever enjoy them. We all have some Christmas baggage, I guess!
Anyway, I started a little late in the year but basically saved $100 a month for ten months, and it was GREAT to have that money when the holidays rolled around and, as others have said, not to have to worry that the money should have been used for something else.
Here’s another thought. We don’t really do Christmas the way other people do. Instead of spending a bunch of money on gifts for friends and extended family we usually just spend time together, either with day trips, mini-vacations or family get togethers. My parents and I stopped exchanging gifts years ago. As for our kids, we buy them nice gifts throughout the year, like on birthdays or when needed. This spreads out the “pain” a bit and we think it makes Christmas much less stressful. I find the uber-consumerism Christmas mentally is a big turn-off and frankly it’s just unnecessarily stressful.
I have both a Christmas Club and a vacation club. I deposit $50.00 a month in each. The CC is completed in Nov and the vac club is completed in June. Neither one is all that I spend but it is a huge help. I want to donate to special charities in December in addition to gifts. It really helps to have this savings cushion. The vac club helps on weekends away, maybe extra meals out over the summer. If I could, I would increase both but that is not possible right now. I think you both will gain peace of mind with one and I too have ‘baggage.’