How to Save For Christmas

It’s a new year, let’s start it out right by learning how to manage our holiday spending money. I know the memories of Christmas 2008 are still only a week old, and who wants to start thinking about what presents you are going to buy for the next Christmas, but it’s exactly what we need to do now.

Start Saving for Christmas 2009

Years ago I joined a Christmas club at my local bank. It’s proven to be one of the best things I do each year. Here’s how it works:

You open a separate account, often called a Christmas Club account, at your bank. This account allows you to deposit money, but does not allow you to take any out. Determine an amount to be taken from your paycheck every pay period. Even if it’s only $5 or $10 — it adds up. Every time you get paid, that amount will automatically be deposited into your Christmas Club account.

In November (or whenever you bank determines) the bank will release the total funds to you.

So, let’s say you did $5 each paycheck, starting with your next check.
Assume you get a check every two weeks.
That’s $10 a month.
12 months.
At the end of the year you’ll have $120 to spend at Christmas.
Cash.

Even if it’s only $120, that’s a present, two, three or more. Even if it’s not your entire Christmas budget, it’s a start.

I started my club when I didn’t really think I had the money to save for holiday shopping. I was using credit cards to pay for presents and suffering those consequences later in the year. It was hard to put away money that I didn’t think I had, but in the end I never noticed it was missing. Over the years, as I saw the benefit each Christmas, I upped the amount I was saving from each check. When Christmas came I had enough money to spend on presents, buy a tree and enjoy the holiday knowing that I wouldn’t be swimming in debt afterward. It’s a feeling of relief that every family should have.

Set a Budget

Another benefit is that it helps you set a budget for shopping. If you pre-determine how much you will spend, and have the cash to do it, you’re less likely to overspend. If you never take out that credit card, you never have to. Using cash will be your new modus operandi.

I came across a new Web site that is taking the bank’s Christmas Club idea to the next level. SmartyPig.com helps you set up an FDIC insured bank account online. And, there are more benefits than just saving money:

Kiplinger’s magazine says, Smarty Pig’s a stroke of genius: You can make your account public so family and friends can chip in toward your goal:

The company has partnered with more than 25 retailers, such as Amazon and Macy’s where you can redeem our savings for a gift card with a bonus of up to 5%.”

Of course, this kind of savings account isn’t just so you can spend money on other people. You could set up an account for your next vacation too! Now, that’s a Christmas present I like!