Christmas Savings Fund

Last week my daughter participated in a Santa’s Workshop event at school.  It is an annual event where children and their parents discuss a shopping budget, and the kids are allowed to walk through “Santa’s workshop” selecting gifts for friends and family while spending up to their established cash limit.  Parents send in money the day of the event, and teachers help kids with the math to make sure they don’t overrun their budgets.

I know a few adults who could benefit from similar restraint, especially this time of year!  With only two days until Christmas I bet there are at least a few of you out there thinking, “I don’t have this person enough stuff to open Christmas morning,” or “I need to buy my Mom another present to match the number I bought Dad.” Believe me, my wife and I are having the same discussions.  The problem is we have already spent our Christmas budget for this year, so we are officially finished shopping.  No last minute trips to Walmart to charge up a few “guilt” gifts this year.

Christmas shopping was a much more pleasant experience this year with cash.  After last Christmas my wife and I vowed to save all year long and spend cash at Christmas.  We managed to pull it off by setting up a $25 transfer to our ING Direct Christmas Fund each paycheck.  We also tossed in some “found” money including a small tax refund and wound up with nearly $600 for Christmas shopping and our annual giving tradition.

If you are already suffering from the worry over Christmas debt I highly recommend setting up your own high yield savings account at ING Direct and stashing a little away each paycheck towards next year.  It makes the entire experience more joyful not to have credit card bills rolling in right after ringing in the New Year.

Here’s what our automatic savings plan with ING Direct looks like:

Screen capture from our “Christmas Fund” at ING Direct

Notice that our account balance is already back up to $79.25 after contributions made since our November withdrawal.  As an added bonus, we also earned a little over $15 in interest last year–enough to add a CD or book as a stocking stuffer.  When the time comes next Christmas we’ll simply transfer the balance of our Christmas Fund back to our checking account, subtract a little for giving, and enjoy a cash-only shopping trip with the rest.


  1. I’m wondering how many people you buy for during the holidays? Are you buying for people outside your immediate family? We have a rule in our house where just immediate family (and few close friends) get modest gifts. It’s important to limit gift giving, as frugal as that sounds!

    Cheers, – a practical living blog.

  2. I laughed a little bit when I read the title for your post today. EVERYBODY always thinks of that! Establish a Christmas savings account before next year.. but after Christmas.. they usually don’t do it. 😉 Anyhoo–it was fun to think about.

  3. On the tighter end of things, where even $25 is tough to part with sometimes, saving even $5 will lessen the blow in December. Seems like so little, but it still helps.

  4. We do something very similar – $50/month for 12 months gives us $600 to spend for Christmas. This isn’t just gifts, but includes ALL Christmas-related expenses, like the tree, any new lights or decorations, Christmas parties, extra food & liquor to have on hand for guests, Christmas bonus for the paper boy, etc. $600 (CDN) was actually a really tight budget for all of that, and I think we’re going to bump our budget next year, maybe to $60 or $70/month. This is the first year we’ve really done this and followed through, and it was such a blessing to have that cash available at Christmas time. I think we have $7.00 left, which renders our shopping complete. 🙂

  5. Hi! I am having a very modest Christmas and still have spent close to $600 (my sons gifts are only $150 of that.) As a single mom I like to thank everyone who helps. Even the homemade gifts (buying supplies) and $5 gifts add up. So I save in my freedom account $50 a month. This way come Christmas I can send my 100 newsletters with family photo, buy small thank yous, and get my boys each three gifts, plus a few stocking stuffers. It brings me great joy to do this and great relief knowing I have the cash.

    Doing the saving myself (it is not automatic and I have access to it all year,) allows me to start Christmas shopping if I see a sale in July.

    Thanks so much for your blog. It has been very helpful to me all year!!! -Becky in NJ

  6. I have one savings account for all of my annual/bi-annual expenses. I came up with a Christmas budget, totaled up my bi-annual car insurance payments, as well as a few other expenses. I then divided this by 24 (# of paychecks in a year) and now I put about $100 into the account each paycheck.

    This year I was lucky enough to receive a bonus, so rather then using it for bills or Christmas, I get to actually use it however I want. 🙂

  7. We’ve used the biweekly paycheck to our advantage. Twice a year I get a third paycheck in a month, it used to cover taxes owed but now is saved or used for bigger house projects. The other was used to establish the Christmas fund well in advance (usually Sept/Oct). I have found that it is very helpful to have the cash stashed away and a known limit.

  8. I, too, have depleted the “cash stash” as we’ve come to call it. I do need to pick up two more small things, but I’ll pay for them from other discretionary money.

    What worked for us was that starting in late August, I put $20 a week in an envelope as well as loose $1 bills from my wallet every few days. Any money that was reimbursed to me (e.g., rebates or cash paid back from friends) went in there as well, as the money had already been “spent.” I also paid cash for various smallish things picked up along the way.

    This system has worked so well for us that I paid cash for birthday presents from that money and still had enough! I plan to continue this system, but with the idea of it being a fun fund as well as well as a family gift fund. We will use it to offset birthday parties and our summer vacation in addition to birthday and holiday gifts.

    On a side note, I am so proud that we’re getting through the holidays not only without adding any debt, but continuing to make payments. After a “soggy hotdog” equivalent last December, it’s quite a victory to have a routine and a handle on the situation while still feeling generous and celebratory.

  9. I don’t celebrate Christmas but most of my customers and family do. Since I have a large family, many friends, and lots of customers, I have literally dozens of gifts to give away. That’s too many to buy all at once. I make a lot of the them (canned goods, knit goodies, pumpkin loaves, etc.) so I have the luxury of doing a bit at a time all year long. This year everyone from out of town got crocheted pot holders, and people in town got jam or applesauce. I do the actual budgeting and materials buying year-round.

    For gifts that must be bought, the great part about budgeting year-round is that if you see the perfect gift at a bargain price in, say, August, you can snap it up and have the cash on hand to do so.

  10. I’m like Alissa – I put about $600 away each year for Christmas. I also tried to do everything out of it, including parties and so forth. That got a little tight, so like her, I am bumping it up a tad.

  11. I do my shopping year round, so the Christmas fund doesn’t work for Christmas as I am usually all done by October.

    However, what the Christmas fund DOES work great for is my property taxes – which are due Nov 15th. I put $60/month away, and when the Christmas fund is dispersed the first of November, I pay off my property taxes! Good use for the Christmas savings fund that is an automatic deduction from my checking account.

  12. Thanks so much for the last minute reminder. I too am done, the money’s spent, and that’s it. But all those reasons resonated with me–just need another one, this kid doesn’t have as much as that kid, my mom doesn’t have enough to open… aargh. Nobody’s going to even notice. Including me. Guilt gifts. Sheesh.

    But this was our first year saving for Christmas, and it was terrific. I’m not actually bumping up for next year though, just starting in January, instead of May. 😉

    And Pokeberry Mary– everybody does always think of that, and maybe it takes a couple years’ worth of reminders before they actually do it, but I’m proof that eventually it has an impact!

  13. I put money aside for Christmas very early in the year. Usually around October/November time I casually look for gifts. My goal is to usually have all of my gifts purchased way before December. This year I was lucky enough to have all of my gifts purchased the first week of November. I absolutely hate going to malls around this time of the year. I refuse to go.

  14. This is a great idea! Even simple & homemade gifts, including food spent on big dinners and special evenings out add up at Christmas time.

    I have a question about ING- do you know if you open up another savings account (like for the christmas fund for example), or have multiple savings accounts, does that effect your credit negatively, as in having too many accounts open?