When Maureen started her first job around 1950 or so, she didn’t have a 401(k), but she did have a Christmas club. Every paycheck showed a deduction for her Christmas club savings account, an account she emptied each December to buy gifts for her family and friends. She tells the story about her Christmas club deductions in the same tone of voice her husband uses when he talks about ten-cent ice cream cones, with a hint of nostalgia about the former way of doing things.
When Maureen was working away in the 1950s, Christmas clubs were a pretty good idea. Ordinary workers rarely invested in the stock market (which was seen as something for rich people to do), and Christmas clubs provided a systematic way for the middle class to save. People recognized holiday gift buying as an out-of-the-ordinary but expected expense and planned months in advance to be sure to have enough to cover it.
Christmas clubs still exist today, but they are hidden in the shadows with a host of other savings options. Few people see Christmas (or any other gift-giving occasion) as something necessary to save for. With the nearly universal availability of credit, the idea of saving for Christmas seems quaint. (O. Henry’s The Gift of the Magi would have little impact if it were written today – readers would ask, “Why would anyone have to sell anything to buy a gift? Just use a credit card.”)
Nowadays you will see books like Debt-Proof Your Holidays. The fact that such books are needed shows how much times have changed. Half a century ago, Maureen’s employer encouraged her to save for Christmas so that she could afford gifts at the end of the year; now we need encouragement to cut back on spending so we don’t have to pay off gifts throughout the following year.
An all-cash Christmas is certainly a worthy goal; however, it should come naturally to someone who has been wisely managing finances throughout the year. It goes back to the basics – spend less than you earn, save as much as you can, get out of debt, and don’t look back. Keeping separate accounts for separate savings goals (holidays, vacation, retirement, college) may help you organize your finances, but once you’re in the habit of saving and living below your means, an all-cash Christmas should be a breeze.
The idea of a Christmas or holiday club account is still a worthy one. Saving a bit from each paycheck for a future goal is still a great model to follow. With a holiday club account you can deposit a certain amount each week or set up an automatic transfer from your checking account, to start accumulating savings. When the holiday season rolls around you can withdraw all the money, penalty-free.
At Spencer, our holiday club account checks are mailed out each October. The account has no minimum daily balance and a low opening deposit requirement of $5. Visit your local Financial Center, or call our Customer Service Center, to open your account today. Next year you will receive a check for all your holiday spending without even thinking much about it!