After Christmas, the number of phone calls increases at my office. Most of the callers have the same questions: Can I file my taxes with my last paycheck? Can I get an advance tax refund loan? These cash-strapped callers know that the answer is “No” but they try anyway. Why? Because these callers over-spent on holiday shopping and festivities, now they are counting on their tax refund to save the day.
Willie Mae Williams, my late grandmother taught me important lessons about saving for the holiday season. She told me to open a Christmas Club savings account at a local bank and deposit a portion of my paycheck throughout the year for Christmas spending money. Grandma had several rules for the Christmas Club account: 1) Don’t withdraw your money until Thanksgiving. 2) Don’t spend more on shopping than what you saved. 3) Make sure you have enough money to put into your Christmas Club account for the next year.
In addition to sharing financial advice, Grandma would pass down our family’s oral history. She told me that savings was very important to her, because her grandmother told her the stories of how slaves saved to purchase their freedom and to purchase land after slavery ended. After run-away slaves settled in the North, they would save to buy their relatives out of slavery. When American Slavery ended, the slaves who saved were able to purchase land.
According to the United States Commerce Department, before the economic crisis of 2008, the average American savings rate was 1.3%. During this time, experts estimated that the savings rate for African-Americans was negative. Since the recent economic crisis, the average American savings rate increased to 3.6% but no recent report reflects a significant increase in savings for African-Americans. Based on my “real world” interactions with clients, these percentages are accurate.