START SAVING NOW TO AVOID HOLIDAY DEBT

You might remember your parents putting money into a “Christmas Club” account when you were a child. It was common to use these accounts to save money for the holidays.

Saving just $5 – $10 a week could add up to a nicer Christmas.

Maybe your parents were on to something.

While there isn’t an actual “club,” there are short-term savings accounts that can be created with a minimal deposit. If your bank doesn’t offer a “Christmas Club” account, consider creating a new savings account just for the holidays.

Bonus tip: You can set up automatic transfers so the money leaves your regular checking account before you can spend it.

Many people are concerned about interest rates when saving, but consider the rates right now. They are all extremely low. CDs, money market accounts, and savings accounts are all paying around 1%. If you invest $1,000 immediately after Christmas, that’s only $10 worth of interest after a full year. It’s better to just get into the habit of saving than to worry about how much interest you will earn—most likely, it won’t be much.

Average Christmas spending in the US was over $800 last year. How much did you spend? If you start saving in July, you’ll need to save about $130/month to have $800 in December.

A “Christmas club” account is a great solution if you have limited funds to get started and you need to keep the money isolated from yourself. Many of us have a difficult time not spending money. But out of sight, out of mind! A new savings account could just be your perfect answer.