An African-American woman holds up a jar of coins to show her savings

A simple savings plan for the new year

Jan 14, 2021
Empower Insights

The dollar signs kept adding up.

Toy, after toy, after toy.

With two young daughters, the holiday season was bringing me and my wife less cheer and more fear with each swipe of our credit card. Our household debt mounted with each gotta-have gizmo and gadget we acquired. Of course, we weren’t alone. The average American borrows over $1,000 each winter to help pay for their Christmas-related commitments and then owes additional costs in fees and interest.1

If we weren’t relying on plastic, we took no comfort or joy in dipping into our personal savings to splurge on extra presents. Short-term satisfaction meant sacrificing our long-term security. But, like most people do, we vowed to break old habits and make smarter choices once the calendar flipped to January 1.

For our New Year’s resolution, we set a joint goal to stash away enough money to fully cover our festive expenses when December rolled around again and conquer our holiday shopping on our own dime.

We stuck to it, too.

Starting a family fund helped us gain control of our finances and unwrap a few extra bucks to buy for everyone on our list.

Here’s how we did it:

We followed the 52-week challenge.

All told, we banked $1,378 throughout the year by sticking to a plan that required a little discipline to begin but equaled a big result in the end. Whatever number of week it was, we simply set aside that amount.2

For the first week, we saved $1.

The second week, $2.

The fifth week, $5.

The 10th week, $10.

The 25th week, $25.

And so forth.

(Obviously, you could grow your own fund even more by doubling or tripling your weekly input.)

By January 31, our family fund stood at a whopping $15. It might not have been enough money for stocking stuffers, but it was just enough motivation for us to stay the course and continue our marathon.

Eleven long months later, we crossed the finish line with a large pile of cash and not a single cent in the hole.

We used a method that worked for us.

To fit our budget, lifestyle and income, we determined an old-school approach would help keep us on a successful track and provide us with a tangible reward once completed. No online bank transfers, mobile app reimbursements or paycheck direct deposits. Instead, we simply dusted off a seldom-used cookie jar from the kitchen cupboard, pasted a “family fund” label on it and filled it with paper bills.

Ones, fives, 10s and 20s, with no sticky-note “IOUs” accepted.

We established a routine.

Sunday was our “fund day” so to speak.

Because we usually grabbed groceries on the first day of the week, we tapped our debit card at checkout and selected the “cash back” feature on the payment machine. For example, when our cart full of food and essentials netted $230 during the 17th week of the year, we got $17 in cash from our checking account and added it to the cookie jar when we arrived home. Then we sealed the lid.  

This technique allowed us to withdraw the exact value we needed and begin each week right on schedule.

Eleven long months later, we crossed the finish line with a large pile of cash and not a single cent in the hole

We verified our balance.

At the end of every month, we’d count our cash, organize the bills and record the overall sum. It was a small sense of accomplishment to actually see how fast our “family fund” was growing. The higher it got, the less temptation there was to “take a loan” because we knew our savings strategy was working.

We spent it!

Research shows that 65% of consumers create a holiday spending blueprint, but most waver and exceed their budget.3

Not us.

At the beginning of December, and before we purchased any items to put under the tree, we had a total of $1,225 in our family fund (with three installments still remaining). From there, we played it safe by allocating that $1,225 to round up gifts for each person on our list, including our friends, relatives and kids. But while were focusing on our seasonal priorities, we didn’t stop contributing to our family fund.

We made our final deposit of $52 into our family fund shortly after “you-know-who” came to town to reach the $1,378 plateau and achieve a milestone that was worth the wait — and worth every penny, too.

As for the $153 left over?

We celebrated New Year’s Eve with a meal at our favorite restaurant and raised a toast to doing it all over again.

Ring in more savings this year with an Empower Investment Account.

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