Saving for Next Year: Christmas Club

Congratulations, MomVesting reader. You've made it through yet another Christmas season. Who's for looking ahead to next year's holiday season? Now, don't click away just yet; hear me out. Yes, many of our seasonal lights are still blinking away after the sun goes down, and many of us have just finished carting out the large garbage bag stuffed full of wrapping and tissue paper. And some of us – the lucky ones – still have a few Christmas cookies or goodies hanging around the house. I know we just wrapped up Christmas (pun intended), but it's never really too early to start thinking of ways to save now for next year's gift expenditures. Wouldn't it be nice to actually have cash on hand to pay for all of those gifts? Why not consider joining or starting a Christmas club?

And That Is?

Glad you asked. Christmas Clubs are often offered through credit unions or places of employment. Typically, they allow an employee to elect to deposit a portion of a paycheck into a fund or account in advance of the holiday season. Each pay period, money goes into the fund, and when Christmas shopping season rolls around, a nice egg has been squirreled away to spend on Christmas gifts.

But I . . .

. . .don't belong to a credit union? Don't have a place of employment? No problem! For one, you can check with your bank to see if a similar program exists. You could even look into starting up a plain old savings account with the intent of saving for next Christmas.

Even if you don't belong to a credit union or a place of employment that participates in Christmas club accounts, you can still create your own version at home. You can set aside money in a shoebox or a piggy bank routinely. It can be a great option to have money to shop with at near the end of the year without having to resort to credit cards or dipping into savings.

Not Just For Christmas

The best part of this whole idea of saving is just that: saving. While Christmas is a pretty hefty expense for most of us coming up on a distant horizon, life often throws us other expenses. Say you know you want to throw your hubby a big 4-0 party this year, or that you'll have three weddings (translation: three wedding gifts) coming up; the same concept of a Christmas club can translate easily into saving money for these expected expenses. Instead of relying on plastic to take care of the party, gifts or whatever else is lining up for you this coming year, why not start putting some money aside now?

Whether it's for Christmas or another expense in your life, saving expressly for those things you know are coming can help save your budget and your wallet a bit hit later.

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Anonymous's picture

Leigh wrote:

Tue, 01/03/2012 - 22:08 Comment #: 1

I love this idea! Last year, Christmas and birthday presents were a bit of a curveball, so I set a budget per person and set aside 1/12 of the total presents amount each month. I don't know anyone with January birthdays, so this worked great! When birthdays came along in July and September, I already had more than enough money and there was still money left over for Christmas. I even budget assuming that I have a significant other and I didn't for Christmas this year, so I had some money left over to throw at savings! I'm looking forward to using this plan again in 2012 :)

Anonymous's picture

femmefrugality wrote:

Tue, 01/03/2012 - 22:33 Comment #: 2

So this really is a question: how does it differ from a separate savings account? Because it takes the money directly out of the paycheck? That money still gets taxed, though, right? And are there any withdrawal dates..or can you just take money out at any time?
Sorry I'm so dumb today!

Anonymous's picture

Niki wrote:

Tue, 01/03/2012 - 23:40 Comment #: 3

This is a great idea. We don't do a Christmas club per se but we do start saving in January for Christmas.

Anonymous's picture

Lindy Mint wrote:

Thu, 01/05/2012 - 05:48 Comment #: 4

We started doing this two years ago. We were tired of being so destitute after Christmas, which also happens to be when our income dips since my husband teaches college and doesn't get paid over holiday break. We set up an automatic transfer of $50 per month and pull out $500 every December to cover Christmas expenses (yeah, the math doesn't work out, it's just easier to work with even numbers).

This year we had a little more income than expected and haven't had to pull out our stash yet, so I'm going to put it all towards debt!