How is your Christmas savings fund doing?
By glblguy
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
August 4th, 2008 at 9:36 am
$1800??? Is that just for gift-giving or for everything involved in the holidays? In either case, what all do you guys do with that much money? Maybe you are traveling?
I don’t have a separate winter holidays fund. I buy gifts throughout the year (I think I have all but one or two already) and my total gift budget for an entire year of gift-giving is only $360 (3 parents, 2 of us, 1 kid, 1 niece, and 4 siblings; we do birthdays, winter holidays, and mothers/father’s day). For specifically in Dec, we get a tree (around $50?) and as we found out last year (the first time we had a tree) we have plenty of decorations already. Things like special foods are just part of the grocery budget for the year.
August 4th, 2008 at 10:32 am
@AnnMarie – I have 6 children, so if I spend $100-$200 on each that’s already $600 – $1200. We generally buy much of our kids clothing at Christmas as well. We don’t travel, but do a few Christmas angel children as well which this amount includes.
It seems like a lot, but goes pretty quick.
August 4th, 2008 at 10:45 am
Oh, yeah, I forgot you have 6 kids (I follow so many blogs I tend to forget the family details). I can definitely understand a larger budget then.
August 4th, 2008 at 11:07 am
That’s right Christmas comes on Dec 25th again this year. This is a budget buster for many, but if you plan for it and put money away each month it doesn’t have to break your budget.
August 4th, 2008 at 12:38 pm
It just occurred to me last month to start saving for Christmas. I started a sub-account at ING too and have set up automatic monthly deposits into it.
As much as I’ve benefitted from reading yours and other PF blogs, we are still very much in a month-to-month kind of financial situation. I really didn’t understand why, and then it hit me: it’s our dependence on credit cards and the idea of spending tomorrow’s money today. This HAS to change.
The last two or three Christmas seasons, we’ve racked up credit card bills that end up taking two to three months to pay off, meanwhile derailing our monthly savings goals during that time as well.
But NO MORE! I’m cutting our spending limit per person way back, and I plan to make many of our gifts this year.
My next step is to actually sit down with pencil and paper and tally the numbers up. I know we will be surprised by just how much we’ve spent on Christmas in the past and how much better we can do this year.
August 4th, 2008 at 4:22 pm
My girlfriend loves Christmas … and one of her favorite ways to save money on gifts is to hit up the after Christmas sales. Despite the fact that she just gave all these people gifts, she is out shopping for the next year almost right away. The plus to this is that if you change your mind about giving someone a gift, you have a back up for someone else or even another event.
August 4th, 2008 at 7:18 pm
I don’t setup a seperate account anymore; I just pull the money from my flexible savings account. If I had kids (especially six of them), I would probably setup a seperate account.
August 6th, 2008 at 10:30 am
This is a GREAT idea – one that I STRONGLY recommend. When you use your credit cards for a one month shopping spree – or for some others, a one day – then you are racking up money that you are going to have to pay off for the next year (sometimes – other times it only takes a couple months), then the vicious cycle starts again the next year, doing the same things, again and again. Worst part about it, you will be paying more than your originally did in the first place. But! By planning ahead like you said, it doesn’t have to be this way! You know, Geezeo can help you with your goal to “plan ahead”. Not only can you budget your money better in order to work out some kinks so that you can save for the other, you can set up goals that will allow you to see you savings account. It will let you know when you are halfway through, and even once you have completed it! And that will make you feel good to know that you can do this thing they call planning ahead, and then that will become your routine for the next year, instead of paying off past debt. Good luck to all with their endeavors of making this year different – let Geezeo help!
August 6th, 2008 at 12:09 pm
We get paid bi-weekly but only include 2 paychecks per month in our budget – which works out to two extra paychecks a year in May and November. The last few years has worked quite well to use November’s “extra” paycheck for 50% savings and 50% Christmas fund.
Although, I guess that gives away the fact that I haven’t done a good job of planning ahead on buying gifts. :)
August 13th, 2008 at 2:29 pm
Great post! I don’t know why I never thought of this before! I referenced you in an article I wrote about exactly how to set up a gift giving fund here: http://www.btgnow.net/2008/08/how-to-plan-and-save-for-gift-giving-holidays/
Also, it’s your turn in the PF Challenge!
August 16th, 2008 at 6:05 pm
Love the blog, I like reading your blog and help the Lord has truly blessed your family. Keep up the good work. -Debt Free Hispanic