One of the biggest financial fears many of us have is trudging to the mailbox in January to recover bills from Christmas shopping sprees. Many people promise themselves they’ll be better prepared next year, only to find themselves in the same dilemma each new year. A Christmas club savings account is one way to avoid the financial strain and make the month of January a joy.

A Christmas club savings account is a special savings account that customers set up at their local bank or credit union. While not all banks or credit unions offer participation in a Christmas club savings account, many do. The concept is simple and with a minimal commitment, you can be well prepared for the next holiday shopping season.

These types of accounts are essentially short-term savings accounts. You open a Christmas club savings account in January. While there may be some institutions that require a minimum deposit to start, most have no minimum. The account is left open through the end of October, at which time you can withdraw the money on 1 November and have your holiday shopping well funded.

To get a grasp on how beneficial a Christmas club savings account can be, consider the following scenario:

If you manage to deposit just $10.00 US Dollars into your account each week from the first week of January to the end of October, you will have saved $420.00 US Dollars. Double your weekly deposit to $20.00 US Dollars and you will have nearly $1,000 US Dollars reserved for Christmas shopping. As an added bonus, many financial institutions offer interest compounded quarterly because you are agreeing to leave the money invested for a short, but definite, period of time.

As a rule of thumb, financial experts suggest that your total holiday shopping expenses should not exceed 1.5% of your total income. However, you can select an amount for regular deposit that you are comfortable with and that meets your goals. Remember, too that you could use a Christmas club savings account to save for holiday travel, not just shopping.

To set up a Christmas club savings account, first contact your own financial institute to see if they offer such a program. If not, check with local credit unions or other banks. You might even be able to set up a direct deposit from existing accounts or at least be able to make deposits electronically online. Establishing the discipline to save small amounts throughout the year is much easier than coming up with excess cash all at once and much smarter than dealing with mounds of bills in January.