Do you feel like the holiday season creeps up to you every year? Rather than getting caught up in a cash shortage, it’s a great idea to throw away money at the end of the year for gifts and trips at the beginning of the year. That said, you can use your Christmas Club account to automate your savings and make your holidays more affordable!
As Christmas/holiday debt continues to rise year by year, saving money has become more important than ever. In fact, a survey by US News & World Report says that in 10 people expect to be in debt while on vacation.
That said, using Christmas clubs gives you the opportunity to avoid credit cards, save money, and use cash instead, which means less stress and more enjoying your holidays.
Are people still using Christmas clubs?
The simple answer is, yes, people are still using Christmas clubs. Christmas clubs may have been more popular in your parents (or grandparents) generation, but they still exist.
According to Agfinancial, the 1950s and 1960s were the most popular with such accounts, and the popularity of the 1970s fell.
But they have stood the test of time as their holidays return each year. And it appears that there will be a more elaborate celebration and wish list and a more expensive holiday shopping season.
It makes sense to suck up your salary a little each month, rather than blowing your budget out of the water when your holidays roll.
What is a Christmas Club Account?
Christmas clubs, also known as Holiday Club Accounts, are a type of savings accounts that are specially tagged with holiday funds. It is essentially to help you prepare for Christmas. This is similar to how a vacation club can help pay for your trip.
Most people use Christmas club savings for Christmas gifts, travel and other holiday spending. More expensive meals, outfits, going out, etc.
Christmas club savings are just one type of savings club. Another popular example is soothing (find out “what is soothing su” here).
How does a Christmas Club account work?
Many community banks and credit unions offer Christmas club savings accounts, allowing you to save money for Christmas. The idea is that opening an account early this year will allow you to save time in the upcoming holiday season.
You can then make consistent payments when you choose to account (weekly, biweekly, monthly or quarterly) with the intention of withdrawing cash from your account around November 1st each year.
Many accounts have a low minimum open deposit to start. That said, to save on holidays, I recommend that you use automated tellership when budgeting on payroll.
However, if you find that you need to withdraw before the set time, you may be subject to an early withdrawal penalty. Think of this penalty as a way to avoid being tempted to spend the money that is in your account before your holidays!
Why should I use a Christmas savings account?
Using a Christmas savings account can save you the stress of not having enough money when the holidays approach. If you plan it all year round, your Christmas shopping is easy.
When you open a Christmas savings account, you can usually choose to contribute directly from your salary.
Setting this direct deposit will save you without “feeling” about dealing with deductions or transactions. In many cases, you can also set up automatic forwarding from your Christmas Club account to your regular account on November 1st.
Now you have a general idea for this account type. Let’s get into the pros and cons.
The advantages of Christmas clubs
Contributing to Christmas Club is a way of handoffs to build positive money habits for savings. You will soon see that all the little bits are summed.
Plus, spreading costs throughout the year makes holidays much more manageable.
If you (or your partner) lack self-control or prefer to track your money goals and save a set-and-forget style, a Christmas savings account is perfect.
A Christmas Club account can even help you avoid credit card debt if you tend to spend too much on your holidays. Plus, it feels like a bonus at the end of the year. You’ll probably get access to all this cash you didn’t think you were missing in the first place.
Plus, Christmas savings are a great way to know in advance how much you want to spend on your holidays, and force you to stick to your budget. Checking your account balance will help you know exactly how much you need to pay.
Cons of Christmas Club
Most Christmas clubs are not attracting much attention.
Additionally, in most cases, your money will be tied up until around November 1st, so you will not be able to use it if you need emergency cash. Otherwise you may need to pay to access your money early.
Moreover, opening a Christmas savings account does not mean it is sufficient to cover all holiday costs. Even if you don’t properly budget for the whole year, you may still feel the financial burden of your holidays.
Additionally, if you have irregular income or have a strict budget, you will find that the money you want to deposit in the Christmas fund will need to be paid to other things. In this case, direct monthly deposits may not be the best option.
Expert Tips: Expand your Christmas budget with cheap ideas
Christmas clubs can help you save a fair amount for your holidays. But don’t forget that you can stick to your budget and find cheap ways to bless them.
For example, can you bake cookies for a colleague or friend instead of buying an expensive gift? Alternatively, you can send homemade cards instead of spending your assets on holiday cards.
Reducing certain things leaves you with more money on more expensive items on your list, such as travel and expensive Christmas presents.
Where can I open my Christmas Club account?
You can open Christmas club accounts in several different locations. See these options.
Credit Union
When it comes to Christmas clubs, a credit union is the best option.
What is the difference between a credit union and a bank? Well Credit Unions are nonprofits and generally focus on the community, with accessible customer service and low fees. Banks, on the other hand, are for commercial purposes.
If you are in a credit union and bank, ask them what they have to offer when it comes to saving Christmas.
You can also check with the community bank to see if they would like to offer a Christmas savings account. Community Banks usually focus on serving customers in the community they live and work for. This will help your community grow.
As a result, it is not uncommon for community banks to offer Christmas savings accounts. If not, there are certainly regular savings account options you can use instead. Remember, there are many ways to save for your vacation.
Other types of Christmas savings accounts
Having an account labelled as a Christmas fund is not the only way to save money. Other smart solutions include:
Cache envelope
A Christmas savings account is like an automated digital envelope system. The principle of allocating funds to specific causes has been extended beyond holidays.
If you want to work with cash or find it easily, try the Cash Envelope system. Keep an envelope labeled “Holiday expenses” and add money each month. Or, put your money aside each month and run a digital version of this.
Deposit certificate
You can also put your “DIY” Christmas savings account on a certificate of deposit (CD).
A certificate of deposit locks money for a certain amount of time. You can then receive more interest than a standard savings account.
High-yield savings account
Even a non-indigenous high-yield savings account can be a useful option for your holiday savings, if you know that you can resist the urge to grow your money and get rid of it before the holidays. (In this case, the account itself does not block early withdrawals like Christmas clubs or deposit certificates.)
Traditional savings account
Another option is simply to use your regular savings account. If you’re not overly worried about earning interest (and interest is not the main factor, as it’s a short-term savings goal), you can try this instead.
Open a regular savings account with your bank and then mark it with holiday costs. Use direct deposits if necessary. It will help you have Christmas on a budget.
Is the Christmas club worth it?
If you need an easy way to save on holidays, the Christmas club is worth it. They allow you to save almost money without thinking about it, that’s great.
Then, by the time you’re ready to consider your holiday budget, the funds are already there.
However, there are many other ways to save on holidays. This idea doesn’t work well for everyone, especially if the bank or credit union doesn’t offer holiday club options.
What can I use instead of a Christmas club?
Try using many other accounts in place of Christmas clubs, such as savings accounts, CDs, or save money on jars that add cash throughout the year.
There are many ways to save money. Most importantly, it matches your savings rate and budgeting. So there’s what you need when December rolls.
Does your Christmas Club account still exist?
Yes, these accounts still exist. They aren’t as popular as decades ago, but you can still use them to fund your holiday goals.
Opening an account like this is a great way to save money and can also facilitate other short-term savings goals. If you deposit your money automatically, you won’t miss it. Instead, you can focus on other expenses.
Does the bank have a Christmas club account?
Yes, many banks have Christmas club options, especially community banks and credit unions. That said, it’s never painful to ask your traditional bank about this.
Whether or not financial institutions offer this holiday savings option to help you save money, or if not, consider other savings account options.
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Use your Christmas Club account to save stress-free!
Life has many sources of stress. Celebrating a holiday with your loved one or taking part in impulsive spending at Christmas is not one of them. No matter how you save, don’t derail your budget on holidays.
Thank you for what you have and what you earn. In fact, why not try our 30-day thank you assignment in December? Then thank the new year and make a budget!