“ It might be summer but now is the time to seriously start looking at getting prepared financially for Thanksgiving and Christmas holidays.”
Key Takeaways:
Plan ahead and avoid the stress.
Find a savings plan that works for you.
Buy gifts in advance and avoid stress.
By: Allan R Kirby
Coping with personal stress is already challenging, but when you add all the financial costs you get from Thanksgiving through to Christmas it can get too stressful for many. This is not fiction; it's an actual fact that Americans are now spending over $1,000 during the holiday season for gifts and related purchases. Additionally, it also appears that 70% of Americans use credit cards and not cash to pay for these gifts.
Unfortunately, many Americans just end up dealing with the financial mess after the holidays are over. Leading to a few months of financial stress by paying off the debt and getting their financial house in order. Additionally, all the spending can lead to regret and even affect your mental health for weeks if not months after the holidays, something we all do not want.
The best way to deal with this is to try and get ahead of the game, meaning saving money or buying gifts long in advance to help spread the financial burden and reduce mental stress.
We have three methods you can use to save money in order to get prepared for Christmas plus another way to get ahead of the holidays to help reduce your financial burden.
1. The traditional way
Believe it or not, it actually works for many people of all ages. We are living in an era of e-banking and e-commerce and cash is simply not used like it used to but it's putting money away in a piggy bank still a great method to save money. I still do it myself and find I can save up a bundle over a couple of months. The reason why I do is because of how simple it is! It's not a complicated method and for some people, it's the simplicity that allows for success.
“It’s the simplest method for many people who just do not want to deal with banks or do online banking.”
When I pay for something, what I do is take all the change and put it in the piggy bank, this includes bills as well as change. Take for example buying lunch at Mcdonald's. If the cost for lunch is $8 and I give the cashier $20, I put the remaining $12 into the piggy bank, which in my case is just a jar. I have found that after several months I can accumulate a few hundred dollars. It's not significant but it does add up.
I also have done this with my kids as a simple method to understand how savings work and how putting even just a little bit of money away can add up over time.
2. Automatic Savings Plan
The idea of an automatic savings plan is to facilitate an automatic transfer from an individual's bank account into a savings or investment account every week, bi-weekly, or even monthly.
So why would you do this? Well setting up an automatic savings plan is actually very simple to do. You just need to either go to your bank to have them set up done by the teller or you can set it up yourself online. What you need to do is to set up a recurring deposit from your checking account into a savings account. The frequency is up to you. Most people tend to transfer the money the day they get paid which is a good idea because it tends to be less noticeable for most savers.
This is another way I save for myself. I set up an initial weekly automatic savings plan to transfer money from my chequing account into my retirement savings account. Over time I have actually increased the amounts and today I have found automatic savings to be indispensable. It’s simply a great way to build wealth without really having to do anything. It takes care of itself. Today I now do automatic savings for “Back to School”, “Christmas'' and “Retirement”. However it's unlimited to what you can save up for, you can save for vacations, a car, school, or a down payment for a house.
3. Christmas Club Accounts
A Christmas Club account is designed to help people save money and avoid the financial stress associated with holiday shopping and other related expenses like travel. Saving money throughout the year will ensure people are financially prepared for the holidays without getting into financial debt.
Basically, it's a special-purpose savings account that allows customers to deposit a set amount of money each week into a savings account. The money is then given back to the customer at the end of the year for Christmas Shopping. Normally at the beginning of December. There are some rules to using such an account such as frequency and amount of money but generally speaking it's affordable for most. Additionally, you will likely find these types of accounts at a credit union as opposed to a major bank.
Here is an example deposit schedule that is used by a Credit Union.
$ 5.00 a week for 50 weeks - $250.00
$ 10.00 a week for 50 weeks - $500.00
$ 20.00 a week for 50 weeks - $1,000.00
$ 40.00 a week for 50 weeks - $2,000.00
“CrossRoads Community Federal Credit union for example has a Christmas Club Account program. ”
Buying Gifts throughout the Year
About two years ago I took it upon myself to start buying gifts in advance, I mean long in advance, usually around the summertime. This is a little more difficult because you never know what someone wants until it's closer to Christmas. But I generally find I can get many of the work-related and extended family gifts done without any issues. This has two benefits, first, I am much more organized, I tend not to forget anyone and that is not good when you need to rush out and get last-minute gifts. Secondly, I find if I start early I can pick up some really good deals, in some cases even better than what I can get on black Fridays and cyber Mondays. I find by slowly buying I can also control my emotions better as well. I am not rushed and I can take the time to ensure I get good gifts and spread out the costs over a longer period of time.
“I can better plan and have control over my spending. No last minute rush to get gifts which has cost me in the past.”
Christmas is getting too stressful for many, it can be a tough time of the year both emotionally and financially. The best thing to do is to get ahead of the game by planning your finances well in advance. By using the options that we suggested could help you alleviate some or all of your stress and ensure you have no big bills to pay after Christmas, now wouldn’t that be nice. Good luck and hopefully you can get ahead and spend more time relaxing and less time stressing about finances.
Budget Planner is a segment of the MySmallBank.com blog written by Allan R Kirby, who writes and produces Personal Finance articles and videos along with My Success Magazine.