Why do you need a Christmas Club Savings?
A Christmas club savings account is necessary. Christmas and financial responsibility. Two things that you do not think would go together, right? Well, many would disagree. Countless people have gone into debt for Christmas. I have seen this so many times in my life, starting in my own childhood. I was raised by a single mother many times she would struggle with money. But at Christmas…she would go overboard. She loved the holiday, and it was a time to forget about troubles. After that came January…and with the new year came a new stack of bills. And the vicious cycle continued. As I graduated high school and started purchasing my own Christmas gifts, and I would continue that cycle. Little did I know that these issues could have been solved with a Christmas club. I figured this out a few years later and it is a godsend year after year.
How I learned that I needed a Christmas Club Savings:
As a young person in my twenties I went down a rabbit hole of credit card debt, and during that learned some hard lessons. I think that the credit card companies prey on college students and young people and I fell victim to that. One thing that I never did was to plan ahead. But as I grew, I learned…and I found some great solutions to those debt problems! Opening a Christmas club is one of those things and I have been using one ever since. There is no better feeling than being financially prepared for expenses that come each year. Now when my kids are making their lists, I have no worries of how I am going to come up with the money to fulfill them. And there are added benefits to this in addition to reduced worry such as stress-free shopping, no bills in January, and reduced anxiety.
Here are the steps to take to open this type of holiday savings account (I promise that you will be glad you did):
1. Find a bank that offers a Christmas or Holiday club (many do)
I have had a couple Christmas clubs (also sometimes called Holiday clubs) at different banks. When I moved, I had to seek out a new bank. They do not all have this service so sometimes you have to search around for a local bank that offers it. It is typically a small deposit to open the club and then you are expected to deposit a couple of times a month. It is a fairly easy process to open the accounts, maybe a 15 to 20-minute time commitment. The best thing to do is use direct deposit and set it on autopilot.
2. Make an initial deposit
This is something that you will normally do while opening the account, so be prepared to make a small deposit ($25 to $50). Each bank will have different rules, so it is smart to call ahead and see what deposit is expected so that you are prepared for that. The great thing about Christmas Clubs is that you control the amounts, so the initial commitment is not a large one. Put a small amount to the side and head on over to the bank. I estimate what I want my yearly check to be, divide that by number of deposits, and that is how much to have withdrawn each time.
3. Set up auto deposits from your paycheck or bank account
In my opinion, this is the most important step in having a Christmas Club. Set up automated deposits and forget about it until your check arrives next October. I have mine automatically deposited each time that I get paid. Basically, you calculate what you want to save for the year and divide that by the number of paychecks and there you go! That is your deposit amount. If you are self-employed and do not get a steady paycheck, set up an automatic transfer at least every couple of weeks from your checking account.
4. Be consistent
This is also important. Once you set this up, do not use it as a savings to dip into when times get lean. Many banks will penalize you for that. And you will not meet your goal/needs for that year. So, do not do it! Stay consistent with your deposits and you will get a nice check in October and be ready to shop.
5. Every October you will be ready for the holidays!
This is the fun step. If you follow the above steps, you will be financially prepared for the holidays with no worries. You can purchase your gifts, purchase your entertainment tickets, and you are ready to go. And because you have automated your deposits, when you get your check you automatically start saving for the next year with no interruption.
When should you open your Christmas Club Savings account?
So, the next questions……when should you start a Christmas club? The answer is RIGHT NOW! Late October is the month when the clubs “reset”, you receive your funds for this year and start saving for next year. I opened mine many years ago and each year am always thankful that I have prepared myself and therefore have NO WORRIES! But…say you discover this article in the spring. Should you open a Christmas club then? Absolutely! Any time is a good time to start saving for the holidays.
A reminder…
One reminder to note – during COVID many banks require appointments in advance. So first, search out banks that have Christmas clubs. Second, get your deposit ready. Third, make an appointment and get on over there to start your Christmas club.
Not sure that you need one?
If you are in doubt of this being a good idea, think about how you will feel next December. The Christmas events are happening, the sales are on for shopping, and you have made your list. Are you ready? Can you afford it? Or will this put you into debt? I bet if you envision that you will be glad that you opened that Christmas club. There is never a time that I have regretted planning ahead, especially in a financial situation. The stress that debt can cause is simply…not worth it.
Southern Living has a very good article with reminders of Holiday Spending Mistakes. Check it out here:
https://www.southernliving.com/holidays-occasions/christmas/holiday-money-saving-tips
To sum it up…
Opening a Christmas club can be a lifesaver when it comes to holiday shopping, outings, and holiday entertainment. Putting that savings on autopilot is so helpful because you basically forget that you are saving. This is one of the most financially responsible things you can do to ensure that you do not overspend, go into debt, or basically spend money that you do not have for the holidays. This one of the best things that I have done for myself and I hope that you do it for yourself too! You cannot open one a moment too soon!
There are many banks that offer this type of holiday savings account. I personally use C&F Bank in my area. Just call around your local area and ask for the Christmas Club Savings. In addition to that, there are other great savings account types to help you to reach goals for youth and vacation savings . See the video below for some examples of these, which can be found at many local banks.
Get out there today and open a Christmas savings account today!
I hope that this article was helpful and inspiring to you. If you liked it, please check out these!
Teaching KIDS about MONEY! Get started NOW!
529 PLANS – Open one for your child today!
ROTH IRA FOR TEENS! Why they should get one!
Kelly says
I allocate a certain amount of each paycheck for birthdays, Christmas, etc., and I only spend what’s in the gift envelope. Thank you for educating all of us because I know the holidays can be a stressful time with gift shopping that we forget the true meaning of the holidays!
Miriam says
I’d never heard of Christma Clubs before! That’s such a wise action to take and makes buying those gifts much more fun since you’ve already saved up for it!
cbrooks0312@comcast.net says
These accounts are great! You can shop guilt free since you have saved up!
Antoinette Bryant says
That’s a great idea! Definitely starting this for next year!
cbrooks0312@comcast.net says
Do it this week! The earlier you start, the more you can save.
Brenda edwards says
This helped a lot. Loved this
cbrooks0312@comcast.net says
Great! Go ahead and get started. Next year you will thank yourself!