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How to Keep Christmas Shopping from Taking Over Your December Paycheck

Last night, one of my coworkers and I were chatting about money management while on our break. She mentioned that after last Christmas, she’s come up with a way to keep Christmas shopping from eating up her December paycheck. She’s been doing it since July.

Every two weeks, when her paycheck arrives, she’ll buy one Christmas present. Once, when the present in mind was more expensive, she put half its cost aside from her first paycheck and half from the second. I think it’s a brilliant strategy. Here are two others:

Christmas Savings Account

Another way to prepare for December is opening an ING Direct savings sub account. I’m not entirely sure what’s “sub” about them, but what matters is that you can open a number of savings accounts containing very small sums. And you can set up automatic transfers of $X into them every week, month, whatever. If you put in $10/week for a year, that should give you around $500 for Christmas.

Need more? Adjust the amount to fit what you plan to spend. Put in bits of any windfalls you receive. You’ll even get a nice little treat of monthly interest.

You can do this with many banks, but a number require higher opening balances and the like, so make sure you find something like ING Direct. ING doesn’t require a minimum balance.

Christmas Club Account

If you want to stick with your local bank, see if they have a Christmas club program. The original idea of these programs was to get people saving. If the money was marked for Christmas, perhaps they wouldn’t spend it on anything else and find themselves lacking again at Christmas.

It’s similar to the concept of retirement accounts or college savings accounts, to protect against mental accounting.

As with any savings account, you’ll want to check what fees would be associated with having a “Christmas club” account. They should allow for lower balances, but they may have more fees than your average savings account. If so, you’re probaby better off with another bank or with using my coworker’s method of spreading out your gift buying.

Advantages and Disadvantages

I see advantages & disadvantages to either approach.

Buying the gifts over time probably relieves the pressure of the Christmas buying season. The disadvantages are that you may a) misplace a present, b) come up with a “better” idea and fight a mental war with yourself over what to do next, or c) break up, stop being friends, whatever (so buy your sweetheart’s present near the end of it all!). But if things go well, it’s possible you’ll have all your Christmas shopping done before the rush starts and feel no pain in your wallet.

While the Christmas saving account/club seems like a sure bet, you may a) stop putting money in it, b) underestimate what you’re going to spend, c) use the money for something else, or d) that you lose some of the money to banking fees. But you won’t have to worry as much about misplacing presents, getting better ideas, or buying a gift for someone you’re no longer with. If the latter two happen, you should still be within the period where you can return the gift with a receipt.

Either way, what matters is that you prepare. Or that you don’t give purchased presents at all.

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The Friday Gathering: Reader of the week
September 12, 2008 at 5:49 am


Jen September 9, 2008 at 11:36 am

I like the ING Direct idea. I have several sub-accounts…they’re just good for labeling savings for specific things. For example, I have accounts such as “emergency fund”, “saving for investing”, “fun money” and “auto savings”. It’s easy to move money around and save in increments.

Aryn September 9, 2008 at 2:07 pm

If you buy a present and then stop liking the person, you can always give it to someone else (assuming it’s not monogrammed.) This year, a friend disappeared (under her own power, she wasn’t kidnapped or murdered) and I never got around to giving her last year’s gift, so it’s getting regifted to someone else this year.

neimanmarxist September 9, 2008 at 2:33 pm

this year we are putting $100 a month into an account. We started in august and the idea is to have $500 by december. That is also the limit in what we will spend on holiday festivities and gifts. I think a christmas account is good in that it reduces the blow- and puts a much-needed CAP on the holiday spending. .

Little Miss Moneybags September 9, 2008 at 3:16 pm

I will be travelling (to the boyfriend’s family) for Christmas this year, so I have to do my family’s shopping (and shipping) early. I keep a gift fund for all Christmas and year-round gifts already, so I just need to work out a budget per person and start watching for deals.

Another suggestion, that you can’t implement until January, is that I always think of the best presents for people IMMEDIATELY after Christmas. Last year I started a list so that I can actually remember what some of those ideas are!

MoneyGrubbingLawyer September 9, 2008 at 3:40 pm

I like to just set aside a bit of money throughout the year and then do my traditional Christmas Eve shopping ;).

Another downside to starting your shopping so early is that you may tend to buy more, either due to new ideas or the simple fact that you don’t realize how much you have already bought. Now of course, it the presents are for me, that’s okay…

mrsmicah September 9, 2008 at 3:53 pm

Some great ideas! My problem with either a personal wishlist or a gift idea list is remembering where I put it. Fortunately, you can do something now like store it in a Gmail draft.

@Aryn, excellent point about regifting. Most things aren’t so unique that you only know one person who’d want them. (if you think of it…which I didn’t when writing this.)

@MoneyGrubbingLawyer, if you either don’t keep track of them or misplace them, I expect that shopping early could lead to buying more. My coworker had a list, which is much more organized than I would have been that early in the year.

[email protected] September 9, 2008 at 4:45 pm

With the cost of shipping so high, the main disadvantage I see in shopping early is that you can’t have things shipped directly to the recpient. Almost everyone on my list falls into that category. As a result, when I Christmas shop I tend to shop in online stores with free shipping.

SavingDiva September 10, 2008 at 8:29 am

I usually set aside money the months leading up to Christmas. However, this year I started to purchase gifts early…only when I saw something special…

shalom September 10, 2008 at 1:57 pm

We set aside $25 per paycheck for Christmas. it’s part of a larger, automatic transfer to a separate savings account that we use to accumulate money for Christmas and other big, non-monthly expenses like insurance, vacation and property taxes.

But I will buy gifts year-round, if I find the perfect thing for somebody. I pay for it out of the special savings account.

I have an Excel spreadsheet that I’ve used for years, that lists each person we buy for and the budget per person. When I buy something, I list it and its cost in the spreadsheet by the person’s name. (Having a budget per person helps me to not over-buy for my favorite people, like my child, or for the people, like my SIL, that are just easy to buy for.)

After Christmas each year, it’s easy to update the list. I delete everything I bought, and adjust the numbers if I think we need to spend more or less next tiem around. Also after christmas, I usually buy wrap, packaging and cards for the next year.

The system doesn’t work as smoothly as I’ve described it, mostly because I also fall prey to the “found a cooler present later” problem; but it keeps me honest about how much we’re spending, so I think it helps.

Bijan's Mom September 11, 2008 at 10:46 pm

My young teenaged nieces and nephews really like gift cards. It’s a lot easier to buy one gift card ($25) every two weeks instead of shelling out $300 on plastic cards in the height of the December frenzy. I can ‘homemake’ or find great, fun bargain gifts for everyone else on the list, but the kids like the money, and I do like to indulge them this little bit – $25 does seem like a lot when you are 15 years old 🙂

castocreations September 12, 2008 at 1:15 pm

Christmas is my absolutely favorite holiday … and I LOVE shopping for gifts. Sometimes I find things early but for the most part I take joy in going out during the “season” and finding the perfect gift.

Of course if I find something during the year I may pick it up, but I generally forget and end up spending more.

We don’t have a Christmas fund but do have a general Gifts fund for all holidays / birthdays.

jane September 15, 2008 at 11:36 am

Great ideas! I usually end up scrambling in December when I have to shop, charging everything…I have been thinking about doing this for awhile, and I really think the savings account will work. It’s easy enough to come up with $20 per cheque from now until Xmas to boost my shopping fund.

CA Girl October 24, 2008 at 11:19 am

I do both, a spreadsheet and savings. I have a spreadsheet that lists everything I have gotten for the past three years. Each year, I add a new column and put in the gift and the cost. That keeps me from getting the same gift for the same person twice, and from spending much more one year than on a previous year. I also start an xmas fund in ING with my tax return and contribute to it each month. I buy presents throughout the year when I see things people would like and take the $ from savings. I keep all gifts in one location and note them on the spreadsheet so I know what I have for each person. Right now, at the end of October, I have half of my shopping done and enough cash still in savings to get the rest.

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