Instead of waking up with a huge post-holiday spending hangover, complete with regret and credit card debt, start the season intentionally take control. Think about how much you want to spend, suggest your relatives do the same, then stick to your plan.
So what should I do?
First establish a realistic amount that you can set aside for this time of year. What does realistic mean? Well $75 to cover all gifts, parties, and food is probably not going to work but blind over-indulgence won’t either. Plan out what you need and put an amount down on paper you are comfortable with. Try to think of the holiday parties you will attend, the list of people you need to buy for, and the amount you are planning on spending for each person, and don’t forget your travel expenses. By writing it all down, you can determine both what is most important and what other costs you might want to reconsider.
Often, I hear from clients that they’d like to not participate in family gift exchanges as adults. The cost, and the shopping just get to be too much. But often no one has the courage to bring this up. Why not suggest that your family do a selected gift exchange instead of gifts for everyone. And set a price limit. Suggest homemade gifts or an outing you can all experience. People remember experiences more positively than they do gifts. Studies show that NOBODY can recall what they received for Christmas in February. But, we often remember the cost of the gifts we purchase as we review our bank statements in January.
Now, I am not saying to avoid buying any gifts, or avoid seeing your family for the holidays. However, after taking it all into account, maybe it makes sense to not go to the New Years Eve party that cost $100 just to get in the door, especially when you still have to buy drinks, food, reserve a table etc. It can be hard to say no and have that feeling of “FOMO” (fear of missing out) go through your head.
What’s next once I set my amount to spend for the holidays?
Tracking your daily spending is like counting your calories each day. It may sound easy, but it can be a challenge for those that have never done it before. My recommendation is to use either your debit or credit card. (Disclaimer: if you are behind on your credit card bills (meaning you can’t pay your balance in full each month) please don’t spend additional money you don’t have.) By using your debit or credit card, this will allow you to go back and actually look at your purchases online. This can be a pretty sobering experience for some people. My challenge to you is to follow this process of tracking your holiday spending from Black Friday to 12-31-18. This will establish a great habit going into the new year.
Why should I track my spending?
The reason this is important is because it can really set the pace for how your next year is going to be established financially. If you start the year off with lots of debt due to the holiday season, it can really set you back from accomplishing your financial goals for the following year. This is what some witty people call a “Financial Hangover.” Not the best way to start a new year. I am a big fan of getting those small victories to encourage you to stay on track. One small victory could be you spent less than what you planned on spending. Another victory could be you have now formed the habit of tracking how much you spend. Lastly, gaining control of your finances usually starts with your daily spending habits. This is very underrated in our instant gratification world but very important to building long-term wealth.
Most of what I am sharing has to do with your daily behaviors and making sure you understand the long-term impact on your finances, going back to counting calories. For some people that find themselves overweight, it usually did not happen over a day, week, or month. It slowly creeps up after years of undisciplined eating habits and lack of exercise. The same can be said with your spending habits. For those that have poor spending habits, the long-term impact can be lots of maxed out credit cards, a very skinny bank account, and a sense of hopelessness with your money.
Once you gain control of your daily spending habits (not just over the holiday season) but year around, you will start to really see the positive impact it has. And, your family may just thank you for having the courage to suggest that you all back off of the holiday spending treadmill and enjoy each other’s company instead.
Chris Vasquez, is a Financial Advisor with Lucien, Stirling & Gray Advisory Group, Inc. in Austin, Texas and is passionate about helping people achieve the life they want. Chris emphasizes that daily behavior with your finances is more important than knowing every detail about financial planning.
All content provided in this blog is supplied by Chris Vasquez and is for informational purposes only. Barclays makes no representations as to the accuracy or completeness of any information contained in the blog or found by following any link within this blog.
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