This is a tough year for many people, especially considering the holiday season is approaching and many of us are wondering how we can afford to do what we want to do for our loved ones and our communities. A few years ago my husband and I decided that we wanted to be able to relax financially during the holidays, and our first step was to create a Christmas savings account.
Did your Grandmother have one of those "Christmas Club" accounts? Mine did. I remember riding to the bank in her car when she made her deposits, and she explained to me what she was doing. She put a little in each month, and then she would withdraw the money in November or December to use for her Christmas shopping. When my DH and I sat down to discuss our strategy, this idea immediately came to mind. We decided to deposit a set amount immediately each month into a separate savings account that would only be used for holiday expenses. By using a traditional savings account we were able to withdraw anytime we wanted during the year instead of waiting until the crazy shopping days just before Christmas. This enabled me to attend the ornament premiers in July (yes, I am one of those people) and catch discounts and other promotions when they happened. After our first year we decided to also include travel expenses in our savings, so we slightly increased the amount we deposited monthly so there would be no year end surprises with airfare.
Once we know our lump-sum for the year, I create a spreadsheet (a pencil and paper list would be fine, too--I just find I work better if I feel I'm being technical). I make a list of all of the people to whom we will be giving gifts, and I also include things like Christmas Cards, stamps, gift exchanges for work, baking and cooking costs, decorations, unexpected expenses, etc. I divvy up our total amount available and record any gifts or other items we buy. As long as our total costs are less than or equal to our budgeted costs, we're doing pretty well!
Are you unable to divert part of your income to a savings account for the holidays? Here's a tip: Use coupons, but instead of handing them to the cashier take a walk to customer service. They will give you cash back for your coupons. Take that cash and stash it away until you can deposit it.
I realize that I'm publishing this on Black Friday, and many of you could have used this information a long time ago. Just read it today and bookmark it for January 1st! Also, check out last week's post on ways to afford Christmas right now (some of the strategies would be great for padding your savings account, too).