Make More Magic With a Holiday Savings Account

The holiday season is in full swing. You’ve likely checked your list twice and scouted cyber deals for the perfect gifts, but if you’re like most, you’re spending beyond your means. Americans spend around $1,000 to make the holidays merry, and half have credit card debt of more than $6,300. So, when the holidays roll around, piling on another thousand dollars on the plastic is likely the only option.

If you’re determined to do things differently, consider opening a holiday savings account. A holiday account can help you stay focused on your savings goals. Earmarked for holiday spending, they ensure consistent progress toward your savings goal and deadline. And while it’s too late to open a holiday savings account for this year, you can start planning now for next year.

The Focus Federal Credit Union will explain how opening a holiday savings account can help you stick to a budget and stay on track, so you’re financially prepared.

What Is a Holiday Savings Account?

A holiday savings account, also known as a Christmas club account, is a type of account designated for holiday expenses. These types of accounts have been around for decades, helping people prepare for the holidays. They’re short-term savings accounts set up by a credit union or bank to encourage year-round planning and saving.

Many credit unions offer holiday savings accounts with varying terms and restrictions to help you avoid spending the funds before the holidays arrive. When you open an account, you’ll need to make an initial contribution, typically from $5 to $50. You then make regular deposits throughout the year, usually weekly or monthly. Contributions can even be automatically deducted from payroll and directly deposited.

The Benefits: Why You’ll Love a Holiday Savings Account

How many times have you sworn you would start saving for the holidays? But it doesn’t always work out. New tires … groceries … life gets in the way and depletes the best-intentioned savings. Or you’re promising yourself right now that you’ll save better for next year. But will you? Opening a holiday savings account can be a financially savvy way to prepare for the holiday season.

With a holiday savings account, you:

• Build Better Financial Habits. A holiday savings account makes it easy to set a realistic holiday budget and encourage regular saving habits. They teach discipline and budgeting for seasonal expenses through consistent saving year-round. You decide how much to contribute each month based on your holiday spending goals.
• Avoid Holiday Debt. It’s too easy to tap or swipe a credit card to cover holiday costs and worry about it later. By saving in advance, you reduce or eliminate the need for credit cards.
• Earns While You Save. Holiday club accounts offer interest on the account balance. While interest rates may not be as high as those of high-yield savings accounts, they can still add up. Who wouldn’t want extra cash for the holidays?

Common Holiday Saving Mistakes (and How To Avoid Them)

It’s not just the most wonderful time of the year. It’s also the most expensive. Stores launch holiday shopping promotions before pumpkins are even carved. With digital deals and in-store displays months in advance of the big day, it’s easy to get swept up in hype and overspend.

Let’s tackle common holiday shopping mistakes, so you can shop smarter and enjoy the season without remorse.

Common holiday pitfalls include:

• Skipping a Spending Plan. One of the biggest mistakes during the holiday shopping rush is failing to set a clear spending limit. Without a defined budget, it’s easy to lose track and overspend. Having a predetermined budget for travel, presents, and entertainment can make the difference between a well-thought-out financial plan and a mountain of debt.
• Underestimating Holiday Costs. It’s easy to underestimate the holidays, and the pressure to create a social post-worthy holiday moment can drain your budget. Obvious expenses include gifts and travel, but often forgotten are items like wrapping paper, cards, holiday parties, and shipping costs, which add up quickly. Tracking every purchase, no matter how minor, can give a clear sense of your holiday spending and help you avoid letting small costs derail your budget.
• Spending Out of Obligation. There’s a difference between giving because you want to and can afford to, and buying because you feel you must. Buying gifts for neighbors, coworkers, and distant relatives can be emotionally and financially draining. Reconsider how you approach your giving.
• Relying on Credit Cards. Yes, they’re convenient, and the rewards programs are nice, but overusing credit cards is one of the most common financial mistakes during the holidays. High-interest charges can quickly erase any savings you scored on sales. While credit cards can be handy, you must know how to use them responsibly.

The Psychology of Saving: Why Separate Accounts Work

During the holidays, you feel pressure to find the perfect gift, the most festive decorations, and coordinated outfits for the holiday pics. But this can lead to emotional decision-making and cause you to spend money you don’t have.

Having a plan in place and a dedicated holiday savings account can develop regular saving habits, reduce financial stress, and improve mental well-being. A holiday account reduces uncertainty and provides a clear picture of what you have to spend. It reduces the stress of worrying about whether you’ll have enough to cover expenses and the dread of bills running into the new year.

How Much Should You Save for the Holidays?

Let’s be honest: when you manage your finances without a budget, you don’t really have anything to keep you from spending beyond your means. Sure, you might have a general idea about how much money you can spend, but without accurate numbers, it’s easy to lose track. 

Creating a budget gives you control before you walk into the store or start clicking on those online deals. You make better financial decisions and enjoy the season without guilt or overspending.

Do the following to prepare your budget for this year.

Review Last Year’s Spend

Look back at past holiday spending to set expectations for the upcoming season. Review last year’s bank and credit card statements. You may not identify everything, but it will provide an outline to help. 

Once you understand how you spent your money, think about what you want to change this year. Ask yourself, were you happy with your spending? Has anything changed this year? Salary change or a new child? Now’s the time to adjust for those changes.

Create Holiday Spend Categories

Creating holiday-specific categories to prioritize your spending and make it more predictable. You want to consider:

• Gifts. Yes, the holiday season is a time of giving, and gifts are likely to make up a significant portion of your budget. List everyone you need to buy gifts for, and set a per-person spend limit. Consider immediate family, extended family, friends, coworkers, and teachers. Be sure to include money for gift wrap supplies and shipping costs for anything needing to be mailed.

Savings tips: Think creatively and keep an eye out for deals during sales. Shop secondhand and consider homemade gifts for neighbors or teachers to keep costs down. Suggest friends and family draw names for gifts to reduce the number of presents you’ll need to buy.

• Travel. Are you spending the holidays on the road? Account for gas, flights, hotels, pet sitters, and tolls. Don’t forget about food while you travel.

Saving tips: If you can, be flexible and avoid flying or driving on peak dates. Extra bags add up, so pack lightly. Consider shipping your gifts directly from the retailer to your destination and wrapping them when you get there. Giving gift cards is another way to lighten your luggage. Packing snacks and meals not only saves time but also money. Choose to stay with friends or family to cut hotel and dining out costs.

• Meals. Celebrating the season usually involves lots of food. Consider the size of your party and what type of food and drinks you plan to serve. Account for meals you’re hosting and where you need to bring a dish. Don’t forget drinks, and all the sweets and baked treats. 

Saving tips: If you’re hosting, consider spreading the cost by asking your guests to bring a dish to share. Cut back on the baking. There’s always plenty of treats to go around.

• Entertainment. Budget for the sights and sounds of the season. From breakfast with the big guy to Nutcracker performances, holiday parties, and office happy hours, November and December are filled with events.

Saving tips: Entertainment might be a place to save. Check out your local community center or event’s page for free holiday festivals and activities. Bring a DIY gift for the host instead of the bottle of wine.

• Decorations and Clothes. Do you need to update your décor or wardrobe? If you have kids, they’ve likely outgrown last year’s holiday outfits and shoes.

Savings tips: DIY decorations, such as garlands, wreaths, or ornaments. Materials like paper and pinecones add warmth while keeping costs down. Check out thrift shops and online resale groups for holiday clothes at a fraction of the retail price.

Budget by Category

Your budget will change, but having a baseline to build on will help you budget more effectively each year. Your budget could look like:

• Gifts: $600
• Travel: $300
• Holiday Meals: $150
• Entertaining: $125
• Decorations and Clothes: $75

Total spend: $1,250

How a TFFCU Holiday Club Account Works

Saving for the holidays shouldn’t start on Black Friday. It should begin in the new year. Doing so puts you in a better financial position. That’s where a TFFCU holiday savings account comes in. You have a separate savings account just for holiday expenses.

Opening a holiday savings account is easy, and setting one up is a good way to stay motivated and accountable for saving a specific amount of time. To make the most of your account, determine your year-end goal. Let’s work off the example above, where your budget is $1,250. If you put $125 per month into your TFFCU holiday club account starting in January, by October, you will have more than your goal, including interest, in your holiday club account.

You can open an account online or by visiting a TFFCU branch. Once you set up an account, you make weekly, bi-weekly, or monthly payments. Whatever works for you. And you can set automatic transfers, making the process easy.

Reduce Holiday Stress With TFFCU

At Focus Federal Credit Union, we’re not just helping you save money; we’re helping Oklahoma families build brighter financial futures. Don’t wait until holiday stress sets in. Take control of your finances by opening a TFFCU holiday club account. 

We offer personalized service, community focus, and flexible account options. You will thank yourself next year when you’re enjoying a financially stress-free holiday.

Aiden Ferguson

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