The holidays are a joyous time, full of laughter, bright lights, warm fireplaces, colorful ribbons, tasty meals, and (hopefully) good company. But they can also be a prime time for getting in debt. If you’re not careful, all that holiday excitement can go to your head. Or more specifically, to your wallet.
After all, spending money has become such a fundamental part of the holidays that it’s hard to imagine them without it. Which is great for the retail industry and the country’s GDP, but not so great for your bank account or your financial goals.
So here’s a list of four financial mistakes to avoid during the holidays:
1. Thinking that the amount of money you spend equals the amount of joy you bring
It’s so hard to escape this one, because we’ve all seen the television commercials where a young child squeals in delight upon opening a gift-wrapped box and finding a brand new video game system. Or where an elegant woman beams as her husband presents a sleek black box with a sparkling necklace inside. We’re conditioned to believe this equation holds true:
MORE EXPENSIVE = MORE PLEASURE
Luckily, it’s not actually true. Sure, it’s fun to receive the video game system or the diamond necklace, but when you look back 5 years or 10 years later, the most memorable (and meaningful) gifts are often the ones that cost very little in terms of money but required time or thoughtfulness or creativity to produce. The card your little brother made for you all those years ago with a drawing of dinosaurs and aliens flying above the family Christmas tree seems really special now that he’s off to college in another state. And you can bet your grandma still has that clay statue you made for her when you were little. It’s probably sitting on her table or counter, and she no doubt still smiles when she looks at it.
Meanwhile, the video game systems and jewelry from ten years ago have been replaced several times over, with the original ones now stashed away in a drawer or a dusty attic.
Obviously, this doesn’t hold true for every gift, in every family, but the point is, in the long run people remember the meaning behind the thing more than the thing itself. So instead of doling out the big bucks for the latest and greatest store-bought presents, set aside some time to create low-cost (or even no-cost) gifts for your family and friends. For example, if you recently went on a long trip with your parents, or your significant other, or your best friend, create a collage or a ‘travel log’ using photos from the trip — or even create a slideshow of fun moments you’ve shared together, complete with music and everything. Similarly, if you and your Uncle Joe enjoy talking about jazz music, go to a local music store and get a used CD featuring legendary jazz performers. By taking a little more time to make sure the gift has meaning, you’ll ensure they like it no matter what the cost.
2. Asking for gifts that will be forgotten or broken in 3 months
The other side of the coin is that the gifts you ask for from other people should be something you will use — and something that will last. In the heat of the moment, a non-stick frying pan or a pair of comfy slippers might not be as exciting as a voice-activated calculator, but chances are you’ll get a lot more use out of them. Rather than have to pay out of your own pocket in January for the new frying pan and slippers, why not just put them on your holiday wish list? You might be surprised at how satisfying it is to get a gift that you know you’ll use. And your wallet will surely thank you later on.
3. Feeling the need to replace your clothes with the new season
Speaking of things that you need, one of the big mistakes we make during the holidays is to convince ourselves that we need brand new coats, scarves, sweaters, gloves, hats, and earmuffs for the cold weather. In fact, the reality is that you almost certainly have perfectly good cold-weather clothing at the back of your closet, just waiting to be pulled out and made use of again. Of course, it no longer conforms to the latest fashion, but who wants to be a conformist anyway? Dive into that closet and rock last year’s (or last decade’s) sweater with pride. You’ll feel good about saving money and the people who care about you won’t care whether you have the latest fashions anyway.
4. Forgetting to pause and enjoy it all
When it comes right down to it, the reason to have financial goals and to work toward financial security in the first place is so that we can enjoy life and do things we like to do with the people who are close to us. So no matter how you spend your holidays, don’t make the mistake of getting too focused on the logistics (shopping, driving, preparing, cooking, gift-wrapping, etc.) to the point where you forget to stop and actually embrace the moments of laughter, relaxation, and camaraderie.
There are now only 23 days left in December — and the holidays will be over before you know it. Take it all in. Believe it or not, that’s the financially smart thing to do!
Image credit: georgiapeachez