Start Saving for Christmas All Year Long
I have some potentially shocking news for you: Christmas is coming! No, I’m not talking about the one in a few days; I’m referring to the one that’s coming just twelve months down the road.
Far too many people — including me — let Christmas sneak up on us. Suddenly, somewhere around late October or early November, it hits us: Christmas is right around the corner and our budget is going to have to catch up.
I hate to break it to you, but Christmas takes place on the exact same date every year. There’s no reason it should have the opportunity to surprise us or our budgets.
So this year, even before Santa makes his rounds, give yourself an early present by taking the following steps:
Review this year’s spending
Take stock of the budget you had this year. How much did you spend? How many people were on your list? Are you happy with this number, or would you like to raise or lower it next year?
Estimate next year’s Christmas budget
Based on your level of contentment with this year’s spending, determine an amount for next holiday season. Is your immediate family growing or shrinking (moving away, maybe)? Are you determined to make more homemade Christmas gifts next year to save money? Decide now.
Divide your estimate by 12
Obviously, this is to reflect contributing once a month for each of the twelve months of the year. If you have a unique budgeting system that works, you could break this down into biweekly (26) or even weekly (52). Apply it to whatever system works best for you.
Automate regular withdrawals
Regardless of whether you choose weekly or monthly, have the funds transfer at regular intervals into a separate account. Many of you already have systems for automated savings and can just plug in next year’s Christmas starting now. If you don’t yet have a system, try creating a specific account that is liquid, but inconvenient to get to. You may want to test out on online savings account.
Start today!
By making your first payment now, you’ll be finished with monthly payments in November. That’ll give you plenty of time to finalize any last-minute gift shopping. The longer you put it off, the more you are going to have to set aside each month.
I don’t want to zap all the fun out of your holiday season. But by starting to save for next year’s Christmas today, your wallet will be thanking you for the early gift this time next year!
Courtney and I wish you and your family a happy and healthy Christmas holiday.
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There are 40 comments to "Start Saving for Christmas All Year Long".
I think this is good advice, something I’ve been doing myself the last two years. In July I get a bigger than normal pay cheque so I always set aside christmas shopping money from that. It kind of sucks at the time but I sure am glad I do it when December rolls around and I can stick to my normal budget without any creative modifications.
Thinking about homemade gifts next year because they mean more to family and friends!
Otherwise- I have been doing this about five years and it works great!My property taxes and Christmas money are in the same account. It works well!
I mentioned the whole saving-all-year thing to a friend of mine and she looked at me like I was insane. Why is it so hard for people to grasp that things like Christmas are a PLANNED expense? /Apply palm to face.
How is this any different then having a Christmas Club account? All banks and credit unions use to have these accounts, you would pay into it monthly or have a deduction taken out of your paycheck. The bank or credit union would then send you a check for the total balance on the 1st of December.
Now most banks no longer offer this type of account but that doesn’t stop you from opening a sub account at ING and labeling it Christmas or opening a target account at Smarty Pig.
Sometimes the best ideas are just old ideas we got away from.
Newspaper clipping of Chase’s Christmas Club account from 1975
http://news.google.com/newspapers?nid=757&dat=19751208&id=3xkIAAAAIBAJ&sjid=v0QDAAAAIBAJ&pg=3586,1006069
Good post! I think budgeting ahead like this also encourages people to earn a little extra money during the year for Christmas, rather than trying to earn more in the holiday season when schedules are already hectic!
We do not exchange with extended family, but still have a Christmas Club. We use it to buy gifts for our children and to pay bills.
Each year we added an extra $5 a week gradually working our way up to over $100 a week. We didn’t mind it when it was just another $5 a week. We use this to pay our garbage, water, sewer fees. newspaper subscription, cable etc for the whole year. Somehow saving for these things under the guise of Christmas makes it seem better. It sure does feel like Christmas in January when all those bills are out of the way for the year!
The first thing that came into my mind too was a Christmas Club. Smarty Pig would be perfect for this sort of thing if your bank doesn’t have a christmas club anymore because it is automatic every month. I’m using it right now to save for some furniture and a trip, maybe I’ll add Christmas too.
I totally agree with Sara A. We save all year for this so we can pay cash but people think we are nuts. For us it just means that we can spend the way we want to, not feel bad about it, and not still be paying for it next year.
For us the money goes into vacation/gift spending savings. We do accumulate some of the gifts during the year so if we spend on that, we just transfer it over.
This advice is great not only for Christmas budgeting but for many known or anticipated events or occasions for the next year. Planning a vacation? Having a baby? Plan ahead.
I also like the idea of a Christmas Club style savings account with ING or even your local bank or credit union.
Adam – this makes a lot of sense but I don’t love Christmas, so I’m not sure I could stand thinking about it every month of the year.
Think I will start a yearly Florida fund instead and escape some of this cold over the festive season.
I have been doing Christmas clubs at my CU for years. They let you deposit whatever amount you decide to set up and then after dividends are paid on October 1st the check is mailed out to you. For the past two years I have not done this (why I did not, I am really not sure) and this year especially it is difficult. I restarted my Christmas club the first week of October when the CU opened them up again. It is so much easier saving a small amount every week than trying to find a few hundred dollars extra every November/December.
Check with your regular bank to see if they offer it. Our credit union re-established Christmas Club accounts about 5 years ago, and I’ve talked to a couple of other people who have received promotional information from their banks “reintroducing” Christmas Club accounts.
With our CU, the Christmas Club is just a sub-account of our main savings account. We control how much goes in and how often (though we could set it up for automatic transfers from checking), but the only real difference from our other accounts is that we can’t access the money. Once it goes in, it stays in until about the middle of October, when it suddenly shunts over into our main savings account.
It does have drawbacks, however. Twice over the years I’ve transferred the “extra” money back into the Christmas Club thinking that there had been an error … only to realize that it was mid-October and then having to call the bank and ask them to transfer the money back into my regular savings account. Based on the bank person’s reaction, I’m not the only one who gets used to the money going into the Christmas Club but then has a brain cramp when it comes back out. 🙂
Why just Christmas? We do a “gift” category that encompasses all the gifts we expect to have to buy over the year. Obviously Christmas is the largest chunk of this (probably 2/3) but the point remains: approximate your gift spending for all birthdays, Christmas, and other events, then spread it across the year.
Great reminder. Start today. Thankfully when we opened our new bank accounts, the manager showed us that the Christmas club account paid more in interest than a regular savings account. It pays to check around.
Xmas isn’t my holiday but this is what I really need to do to prepare for Passover every year. For 8 days I spend at least $1,000 plus boarding the dog (currently about another $400) and I’m always scrambling for money to pay for it even though I usually have a 3 payday month in April. Now that I’ve finally started to set aside money again for things like the fuel oil, property taxes, etc. that only happen once a year I have to try to get Passover straightened out too. I’m just not sure how much I’ll be able to do in the next 4 months or so but I have to make it a priority for the next year.
I take this further. As well as doing this for Christmas gifts, I also list out everyone’s birthday, mother’s day, father’s day, and work out the budgets for them, plus another $100 or so for unexpected gifts.
Then I add it all up, divide it by 26, and that’s the amount we put aside each fortnight. No surprises at all, once I got over the shock of how much we really spent the first time. (It’s been pared back each year.) Then at the end of the year if I’ve got anything left over I sweep it into general savings and start again 🙂
If you want to be really organised you can also keep a spreadsheet showing how much you spent on each gift vs budget but I don’t bother.
I just made my first deposit into my Christmas account – for next year – this week! I have a special separate free checking account where I make small weekly deposits (from what is left over from the weekly budget). By the time Christmas rolls around I have enough money to pay for everything we need and there is no need to charge anything. Good, good advice!
Sigh — this may be a great idea. But for January 6 or 7, not December 20! I think that too often US culture minimizes real enjoyment of any event by always looking ahead of it — we haven’t even celebrated this Christmas yet!
Thanksgiving gets spoiled by becoming just the day before “Black Friday,” and I’ve already received my first post-Christmas sale catalogs, and it just seems odd to me that we can’t stop and enjoy some good times without thinking about the next thing… It wasn’t always thus — for most of Christian history the celebrations that began on Christmas lasted to January 5th (Twelfth Night), and even in the mid-19th century, newspapers were still advertising “good books for holiday giving” after the 1st of the year. My dear husband’s family used to buy their Christmas Tree on Christmas Eve but he was the child of older parents, and that now sounds like a weird tradition…
I suppose people who put up their holiday lights the weekend of Thanksgiving are bored with them by Christmas, and the tree that went up December 1st or so will be dead by then, but, well, it does seem odd to me.
My credit union does have Christmas club. The money is deposited November 1st into your account. Funny I notice this year they are actually advertising it for next year. Think its making a comeback!! I’ve done them for YEARS and I remember a long time ago you used the bank book that had so many payments to make and they stamped the book! The check they sent had a Christmas tree on it! I guess I am old.
A sure fire way to save on Christmas presents. Have less friends to give gifts to.
1) $0.
2) $0
3) $0
4) $0
5) Awesome, I’m finished! Thanks Baker!
Tyler, Tyler, Tyler, Tyler. You are a piece of work. 🙂
Thanks for the kick in the butt! Just set up a Christmas savings account and automatic monthly transfer. No more stressing over money next holiday season for me. 🙂
Adam – this is a great idea – I’m going to go into my ING account and add another sub-account immediately for holiday gift spending. Brilliant!
My solution is that I use the Dependent Care Savings account. It pulls out the money pre-tax from my account, so I barely even notice that it’s gone from my account. At the end of the year, I can make a claim for the full Xmas budget, plus I usually have extra $ as well.
Great advice. We do this with all expenses or bills that occur at some point during the year but not every month — real estate taxes, various insurance policies, vacations, gifts, etc.
We do this and have done so since we got married. Its great to come into the holiday season with a fully funded holiday budget. And since we automate it we don’t actually think about it but twice a year – (1) when we set up our auto transfer and (2) in November when we start our holiday spending.
We do this for vacations/travel and other planned expenses.
In addition to the Christmas club auto withdrawals: Cash the check when you get it. Put it in an envelope with a list of all the Christmas expenses: Christmas dinner, holiday tipping, wrapping paper and cards, lunch out while shopping, and, of course gifts, with a dollar amounts attached to each line item. Pay cash for everything. If you shop on-line: Take the cash out of the envelope and set it aside to pay the charges when the credit card bill arrive. When the envelope is empty, you’re done with holiday spending. I’ve been doing this for many years. It sure is nice to not have the painful credit card bills in January. From readiing other posts it sounds like I’m fortunate that my employer direct deposits my Christmas club withdrawals. I never have the chance to “borrow” from the fund mid-year.
Lots of people have mentioned the “Christmas Club” accounts. (My Credit Union calls it a Holiday Savings Account) Some advantages to that over a regular savings account that my credit union has:
1) No minimum balance! My other savings accounts at my credit union have a minimum balance of $25. Since I have 5 savings accounts, that ties up $125.
2) My credit union actually penalizes you if you withdraw manually instead of taking their transfer. This is an advantage because you aren’t tempted to use the Holiday money for other expenditures.
I love the way my bank does it, because they award you all the interest on October 31st, and then automatically deposit the money from the Holiday account in your “Main” savings account on November 1st. I put $100 a month in it and use the money for travel expenses over Thanksgiving and Christmas, extra food we buy for entertaining, gifts, our yearly Christmas Ornaments we buy, etc.
I think everybody should have a holiday account.
This is a good idea. I like shopping for Christmas, but don’t budget for it. I will admit that Christmas is my achilles heel, where I DON’T want to be a penny pincher, but at the same time if I plan maybe I can make it more enjoyable. Here are other suggestions.
If you do exchanges, pick out the people for next year now and decide on what the budget is. This way you can shop during the year for that person. Mentally set a budget for each person on your list, and keep to it! If the budget is less than what you are doing now, let the people know in advance so they will have a year to get used to it. But mostly for myself, I need to Set a Budget, total, for all christmas-related things including presents, stocking stuffers, decorations, food and entertainment. That way it will encourage me to be creative about spending, for example reusing paper from last year, baking at home, etc to stretch the budget for other areas. We have two kids and large extended family on both sides (all the kid’s grandparents, aunts, uncles, nieces, nephews etc) so I need a plan of attack.
I just started an ING Subaccount “Christmas 2010”. I’ll try to put 20 dollars per paycheck in. As well as any bonus money.
Being prepared for these irregular expenses is the only way to avoid sinking the monthly spending plan. And Christmas can be such a huge expense, too. Kudos to all of you that are using your ING accounts for this. Online savings accounts are just the best!
In addition to saving a certain amount a month, I also start buying presents early! When I see something I think the person would like, or if they mention something during the year, I make note of it and get it when I see it or have a good coupon. This takes care of both the financial stress and getting gift stress!
Saving ahead of time is one method of holiday planning I’m sure won’t backfire. Buying all my gifts moths early, however, led to nightmares and headaches when the item was unwanted or damaged and the return period was long gone. So much for being Princess Prepared.
We do this for Christmas gifts and also for any expense that we know will happen every year but is not monthly. We make it into a monthly expense by putting it as
a line item in our monthly budget.
Other categories we do this with are “all other gifts” (birthday, wedding, mother’s day), auto maintenance (oil changes, car washes, regular maintenance such as new tires, timing belt), car excise tax, our water/sewer bill which is billed quarterly, magazine subscriptions, veterinarian bills, classes for our kids (swim lessons, dance lessons, soccer, etc).
We estimate the annual amount we spend on these, divide by 12, and change our direct deposit to have that directly deposited to savings so we don’t accidentally spend it. When we do spend it we transfer that amount from savings to checking. It’s not totally exact but close enough.
We are essentially saving for these things, but we don’t really consider it saving because it is part of our monthly budget – we consider it a monthly expense that we have to allow for.
Christmas club accounts are wonderful. Everyone should have one. $10 per week becomes $520 at Christmas. Woo Hoo!
If you don’t do Christmas, use it for a great vacation or something else. When my old cat was sick, I used to have a little account set up just for veterinary bills, which were too irregular to put in my regular budget.
Why limit the idea to just budgeting for the year (which by the way is an excellent idea)? We’ve been doing this with our CU for teh last eight years.
There are great sales after Christmas and year-round. Why not start picking up items/gifts on clearance for next year? Close to Christmas, you won’t have as many gifts to buy. And your Christmas Club? You can spend the excess on something else, or start building on it.
I’ve saved a meager $5 per week this past year. I don’t miss those five dollars, but it’s nice having it during Christmas time. Easy and stress-free.
It seems odd; we have used a Christmas account through our credit union for years. All the way through our debt accumulation and debt elimination.
Why so open minded to this but so close minded to proper money management in all other aspects of life? Go figure.
Budgeting makes all the difference!
I went to an after-Christmas sale and stocked up on birthday gifts for the coming year for the children. With many grandchildren and a few nieces and nephews, I saved a bundle. Think I spent about $30 total!