That’s all well and good, but a holiday splurge should be weighed against more pressing personal financial needs.
“Our long-term goals, such as retirement savings and having an emergency fund, should always take priority over anything that is presented with a bow and purchased during a Black Friday sale,” Ritter adds. “Kids will always have long wish lists, and it’s good for them to know that there isn’t enough money in the family budget to cover everything. Challenging them to prioritize their wants and make trade-offs is essential to helping them develop critical financial capabilities.”
T. Rowe Price reports acrimony comes part and parcel with excessive holiday spending. “Parents who overspend on holiday purchases are more likely to argue,” the report states. “50 percent of the parents who overspent on the holidays argue about money with their spouse, while only 27 percent of parents who did not overspend argue about money with their spouse.”
To keep a firm grip on spending over the next six weeks, leave the credit cards at home, or far away from any digital device you might use, to pay for the holidays.
“Try using cash for most of your purchases,” says Christopher McGill, chief executive officer at East River Bank in Philadelphia. “People who use it spend more wisely and are more accountable.”
Also, have a strict sending plan in place before you embark on any holiday shopping excursions, online and offline. “Keep your impulses in check by doing your homework before you shop, browse, and buy,” says Kristina Michniak, global apparel manager at Greensburg, Pennsylvania-based Spreadshirt. “Set your budgets and timelines before you switch to shop mode before you are sucked in by holiday ads, promos, and pressures.”
Steve Siebold, author of the book “How Rich People Think” advises consumers not to fall for marketing campaigns that make you feel as if you’re getting a great deal when you’re really not (i.e., buy it today — pay for it tomorrow). “Also, allocate a certain amount of money for each person you plan on buying gifts for and don’t overspend by even a dollar,” he adds. “Don’t even think of using a credit card unless you are 100 percent sure you can comfortably pay it off at the end of the month. Don’t get caught up in the moment. If your shopping cart is overflowing, step back, regroup and make sure you can really afford everything you plan to purchase.”
When the holidays are over, plan way ahead for 2016 and set up a savings plan for next Christmas, thus cushioning any potential financial blow down the road.
“After the holidays, set up a separate savings account for your holiday season 2016, and put money from every paycheck into a savings account separate from all other money for next year,” says Julie Murphy Casserly, a certified financial planner and author of the book “The Emotion Behind Money.” “So, if you want to spend $1,200 in December 2016, and you’re paid two times per month, then take $50 per check and put it into the separate savings account.”
Electronic savings accounts are the best for this tactic, Casserly says.
If you do overspend for the holidays, you’re not alone. Even so, it doesn’t have that to be that way. Stay within your budget and you’ll still have a great time during the holidays.