Becoming Financially Secure: Building Your Wealth - Part 2

In the previous blog, I provided you with a couple options for building your wealth over the long term for 10+ years or more.  These are suggestions to increase your net worth without having to sacrifice a lot.  While the information I am providing to you can also be found elsewhere on the internet; I am providing it to you from the standpoint of someone living from paycheck to paycheck.  I want that cycle to stop for you as well as for myself.

The following method of saving funds has been successfully tried by myself and others.  For one reason or another, people stop contributing to a chosen method and wealth building becomes stagnant. We must constantly be vigilant about building our wealth.

Christmas Club

Saving to a Christmas Club is a great way to have money to shop for presents for Christmas.  And the funds are usually disbursed around the first week of October.  Now there is a certain major chain we love to shop at that only have layaway for the Christmas holiday, generally starting mid-September or the beginning of October.  But there are other marts that offer layaway year round.

I bring the layaway option up because payments can be made over time from your disposable income. When it comes to the Christmas Club savings approach, shop around to find an account that offers the best options with regard to your initial deposit and interest rate.  Generally, there is going to be an early withdrawal penalty although you may find there are some financial institutions which may allow you to make one (1) withdrawal without penalty.  You may be able to make direct deposits from your income weekly or monthly or make deposits from an account you already have.  You will want to check out the different programs which have varying dates when your money will become available.  As for the payment/payout method, you may be able to choose between the option of having a check mailed to you or having the money directly deposited into your account. 

Let's say you begin saving in the Christmas Club the first week of January with disbursement of funds scheduled for the 15th of October.  For this example, we will say your last deposit to the account is the first week of October.  This means you have been saving to your Christmas Club for 40 weeks.  At a minimun of $10 per week that is $400 to be disbursed not including any interest, if earned.  This example will not be using any interest earned.  Instead of spending these funds on a shopping venture, save it.  Place half into an interest bearing savings account and place the other half into an Individual Retirement Account (IRA).  If you place all of it into an IRA, then all of it is tax-free until you start to draw it upon retirement.


With just a minimal investment of $10 to a Christmas Club and depositing those funds into a savings account, over the course of 15 to 20 years; that is an additional $6,000 to $8,000 earning interest in your account.  While this amount is not significant, it does provide additional interest earning savings and the more you are able to save on a weekly basis, the bigger profit margin at retirement.