How is your Christmas savings fund doing?
We received a call from my oldest son’s football coach last week who informed us the first football practice of the season starts tonight. Tonight? Wait, it’s not even…oh wait, it is August already. Whoa, school starts in 3 weeks. That also means Christmas is only 5 months away.
How is your Christmas savings fund?
I wrote about starting a Christmas savings fund last year. I strongly advised that in order avoid using credit cards during the Christmas season that you should begin automatically setting aside some money in a special account (I use ING Direct). I suggested that you should determine what your Christmas budget would be for the year, divide that amount by 12 and set-up an automatic savings withdrawl in that amount.
Did you do that in January? How is your Christmas savings fund?
We currently have $1200.00 in our Christmas fund. The first week in January I logged into my ING Direct and set-up an automated withdrawal from my primary checking to my ING Christmas sub-account. Setting up the transfer is always a bit emotionally difficult to do, especially when Christmas seems so far away, but making it automatic has the advange of me really never even noticing.
Now all of the sudden that $150 per month transfer has me $1200.00 already for Christmas. No stress and no worrying about how to pay for Christmas.
A number of local banks offer something called a Christmas club savings account that works exactly like I just described. The Christmas savings club account is linked to your checking account and the bank withdrawals a set amount each month to help you save for Christmas. I remember my parents using one of these when I was a kid.
It’s not too late to begin saving for Christmas
I’m afraid many of you either didn’t heed my advice or maybe didn’t see it. As a result, maybe your answer is $0 or some amount far smaller than it needs to be. Well, good news: It isn’t too late to start. Sure, you’re monthly amount is going to be a little higher, but that’s still far better than being faced with coming up with $500, $1000 or even $2000 on December 1st.
The same principles apply: Determine your Christmas budget (ours is $1800.00 .. although we probably won’t spend that much). Divide your budget by 5 months, and make that savings automatic. If you can’t make it automatic, than put a reminder on your calendar to transfer it. No Christmas savings fund ? Well, either head over to ING Direct and start one, or at least make a cash withdrawal and stash it in an envelope in your house somewhere.
I would also recommend marking your calendar for next year to set-up that automated savings beginning in January so you distribute the savings over the year instead of 5 months.
Financial Advice: Plan ahead
I know it seems way to early to be thinking about Christmas, but this is a really great example of some overall wise financial advice: Plan ahead. What does planning ahead mean? Here are just a few examples:
- Know that Murphy will come visit and most likely he’ll leave you with a few problems that cost money. Establish an emegency fund to take care of these little unexpected “visits”. Plan ahead and know they will happen. Expect them, and be prepared.
- We all have to pay property taxes and insurance. We also know when family member’s birthdays are, wedding anniversaries, etc. Since we know these dates are coming, we can plan ahead and begin saving for them. I use Google Calendar to set-up reminders. For example, I treat my property takes just like my Christmas fund. I begin saving to pay for them in January. I also have a reminder to begin saving for my wife’s birthday and our anniversary 2-3 months out. I set-up special ING Direct sub-accounts for these kinds of expenses.
- The day will come one day when you will retire, either by your choice or your employers. How will you live? How will you pay for food, shelter, medicine, health care and all of those other expenses. Again, plan ahead. Anticipate your financial needs and begin saving now using a 401k, Roth 401k or IRA account.
I believe it is never to early to begin planning and I always find it valuable to plan conservatively. The cost of planning conservativly is just having money remaining that you can either save, invest or even give away. That is a far better alternative that not being conservative and being left short.
Each Monday here on Gather Little by Little I write about topics and techniques for saving money. This article is part of that ongoing series called Money Saving Monday Tips.
What are you thoughts? How is your Christmas savings fund doing? Add a comment!
Photo by: Yogi