According to the National Retail Federation, holiday spending is projected to increase anywhere from 3.8% to 4.2% in 2019. Their survey found that people expect to spend an average of $1,047.83 this season contributing to the even more inflated projection of $730 billion spent across the country for the months of November and December.
Not only are people spending more money during the holiday season, but they are also often spending more than they should. A 2018 Nerd Wallet survey found that 51% of people anticipated overspending during the holidays.
Overspending during the holidays is far from a novel phenomenon, but it is important to talk about to help curb this wallet-damaging trend. Today, we want to help you think about your holiday spending in a new way, one that will refocus your energy from the material to the personal.
We know we are going to spend money. In fact, there are so many things that we need to spend money on: housing, food, entertainment, etc. Instead of constraining spending, try to approach spending from a new angle: intention.
Intentional spending is all about spending money according to your values so that the money you spend goes toward bettering yourself and those around you while helping you reach your goals. When you approach your holiday spending, give gifts with intention. You don’t have to purchase the next big (and often expensive) piece of technology ‘just because’. You can use your money in a more intentional way, one that will benefit you and the person you are shopping for.
As you work to give gifts with intention, be sure you are respectful of your budget. Being honest with your budget will not only help curb overspending, but it will also eliminate the post-holiday guilt where the credit card bills start pouring in. The health of your finances is the most important aspect here.
Remember to be intentional about saving but also about spending. If you are in a tight position, you don’t need to stretch yourself thin. Being on a tight budget also doesn’t mean that you can’t give anything. Give what you feel comfortable with. By spending with intention, you will be using your money in a way that reflects your values. Presents for the present’s sake don’t mean anything and aren’t worth your money. But gifts that have value and meaning do mean something.
Sometimes we overspend because there are just so many people on our list or we feel obligated to spend money on a certain person. One way you can combat this is by drawing names for presents, that way you aren’t buying presents for each and every cousin, their spouse, and kids.
Only spend money on the things that you want to spend on. Don’t spend based on obligation or guilt. Your great-aunt’s cousin who sometimes crashes your dinner doesn’t need a $30 candle as a souvenir.
One budgeting mistake that many people make is forgetting about gifts. In order to help ease the holiday stress, save extra money each month for your “gift-fund.” You can save as much or as little as you like, but by actively saving throughout the year, you won’t feel as pressured to come up with extra cash when the holidays roll around.
Let’s say, for example, you save $50 each month for gifts. If you start in January, by November you will have $550 saved up for presents. When you get into the habit of saving year-round, you will also have a better sense of how much you actually have to spend and what your budget is in the first place.
One reason that people overspend during the holidays is that they don’t really know how much they have to spend. By building in a savings strategy you will be better able to track your spending and have a clear amount of what you can give. Creating an active savings strategy year-round will help increase the efficacy of your savings plan and help alleviate stress during the holidays.
Not all gifts have to come wrapped in paper and topped with a bow. Make this year the one where you get creative with the gifts you give. The holidays have become much too associated with material things, but the most important part of the holidays is time with loved ones.
Optimize the time you have by gifting experiences that can bring you closer to your family. Does your granddaughter like to bake? Sign you both up for a holiday-themed baking class and enjoy the treats afterward and watch your favorite movie at home. Perhaps your grandson is an excellent skater, take him to the ice rink and then maybe out for a dinner. You could even suggest getting the family together for a movie night or a game night, something that will get you together, talking, laughing, and spending quality time.
Gifts come in so many forms. Take the time this year to give them with intention and purpose. By spending your money according to your values, you will be less likely to overspend this season. Enjoy time with your loved ones and remember, spending is always secondary to family.
We love helping people reach their financial goals. Does your budget need a refresh? Give us a call and we would love to help you get it on track.