It’s hard to believe, but before you know it the holidays will be here. I know this because I just saw my first Black Friday ad for the season. It seems every year stores are starting earlier and earlier with their holiday sales. We should never forget that the goal of these ads is very simple and that is to get you to spend, spend and spend some more during the holiday season. Just because retailers are encouraging us to open our wallets and spend during the holiday season doesn’t necessarily mean it is something we should be doing. After all, let’s never forget that the holidays are not about causing you financial difficulty by overspending but rather, holidays are meant to spend quality time with family and friends. Going into debt is no way to celebrate the holiday, and no one you love wants you to experience financial difficulty in order to buy them a present.
My advice is that before you begin your holiday shopping, set a budget for yourself. I cannot tell you how much you should spend for the holidays, but one thing I do know is that if you have to put purchases on your charge card, and you cannot afford to pay the balance in full when the bill comes due, you probably are spending too much. Charge cards should not be used to finance purchases. Rather, charge cards should be used as a matter of convenience.
Establishing a budget for your purchases is the first step along the way. The second step is deciding exactly who you are going to buy gifts for. You don’t need to buy a gift for everyone you know. Once you know who you have to buy gifts for and what your budget is, it is much easier to allocate your resources. I believe everyone needs to have a game plan for holiday shopping before they begin their shopping. Having a game plan before you begin will make it much easier for you to not overspend during this holiday season.
Every year you read stories about people who are beginning their holiday shopping and are just getting out of debt from the previous year’s holiday purchases. As far as I’m concerned, that makes no sense. As I said earlier, the holidays are meant to spend quality time with family and friends; it’s not time to go into debt and cause yourself financial difficulties. Therefore, something you may want to consider is talking to family and friends who you traditionally exchange gifts with and consider putting a financial cap on holiday gifts. I know that these types of conversations are uncomfortable and somewhat difficult to have; however, let’s not forget who these conversations are with. These conversations are with your close friends and family, and you should be able to discuss with them limiting holiday gifts without being embarrassed. After all, I can assure you that anyone who loves you and someone you exchange gifts with wants you to enjoy the holidays rather than have you experience stress and anxiety by overspending during the holiday season. We always tell children that it’s the thought that counts, not how much someone spends on a gift. Maybe this is the year your family should put that into effect.
Retailers love to equate gift-giving with love. The more you love someone, the more you spend on them. That is not the case. What you spend on someone during the holiday season has nothing to do with love and affection. Therefore, it’s important as we enter the holiday shopping season to not get caught up in that vicious circle of spend, spend and spend some more. Rather, you should be smart and fiscally responsible. Just think what a wonderful gift it would be for someone to be relieved of the financial pressure that goes with the holiday season. I can assure you that without the financial pressure, you and your loved ones will have a much better holiday season, and after all, that’s what’s most important.
Good luck!
Rick is a fee-only financial advisor. If you would like Rick to respond to your questions, please email Rick at rick@bloomassetmanagement.com.