How to Mentally Approach the Holidays to Avoid Poor Financial Decisions


The holidays are that one point during the year when we have to grapple with the tough task of buying meaningful gifts for all of the important people in our lives while, hopefully, staying within the constraints of our budget.

But oftentimes, the buying beats out the budget and we’re faced with that overwhelming guilt when January’s bills remind us that we allowed the stress of the season to dictate what was spent.

It’s a pattern that many of us have come to expect, but it doesn’t have to be normal. In fact, it should be abnormal to associate the holidays with anxiety and overspending.

Are you ready to create that new on-budget-and-feeling-good normal?

Let’s do it.

Get acquainted with your financial limits

In order to really decide what your holiday spending limit is, it’s time to get acquainted with your current financial situation (which, hopefully, you already know inside and out).

  • Do you have money already set aside for the season?
  • Do you have any upcoming out-of-the-ordinary expenses coming up that would trump holiday spending?
  • How much wiggle room do you already have in your monthly budget — i.e. how much is left over after you’ve covered your necessities and savings (feeding your emergency fund, saving for retirement, etc.)?
  • Will you have to divert money away from financial goals in order to pad your gift budget? If so, how far will it set you back?

With the answers to these questions in mind, set a spending limit range with the intention of staying as far below your maximum level as possible — commit to putting in the legwork to get the biggest bang for your buck.

This number should not be large enough to constitute monthly payments far into the new year. If it’s not in your monthly budget, or the savings that you’ve set aside for this very purpose, it’s not yours to spend. Period.

Often times the holidays are just another point in the year when it’s easier to opt for instant gratification than it is to take a step back and really soak in the gravity that small decisions can have on the bigger picture. If you aren’t able to recall those bigger goals at a moments notice, a holiday budget will at least serve as surface-level  boundary reminder.

Create a comprehensive gift list

Who would you like to buy gifts for this year? Make a list of every single person you plan on shopping for from your spouse to your child’s teacher and a targeted spending limit for each person. But remember, if one goes over, the money must come from another area. There’s no pulling from outside the allocated money.

When I start considering my list, I view it in tiers – I know that I will be spending more on my immediate family than I will on coworkers, for instance. Therefore, my budget is allocated differently for each group, but it must all fall within or below my target number.

With that list, brainstorm ideas for that person. Going to the store with an idea is far easier than going to the store and hoping what they have will fit the tastes of the person you’re shopping for while miraculously staying within your budget. Generally this leads to a rushed purchase and a scrapped budget.

If the dollars simply aren’t stretching far enough to cover your list, reconsider your gift plan. Can you ditch the gift cards and bake a batch of fudge instead? Can you offer a service like a night of free babysitting?

Push yourself to be creative – those gifts are generally the most appreciated anyways.

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Start early and avoid deceptive deals

Are you caught up in the hype of limited time “deals” without really knowing if it’s a deal at all?

It happens to the best of us.

The one time I gave in to the Black Friday hype I realized that I was actually convincing myself to buy things I wouldn’t have bought otherwise because I was operating from the (crazy) mindset that I just couldn’t afford to pass up the deal.

Since the one Black Friday debacle, I’ve come to realize that the earlier I start my shopping, the more creative I am with my gift giving. I buy things as I come across them because they really make me think of the person I’m buying for, instead of frantically searching around the mall in a five-hour time frame for the 20 people on my list. That’s just pure misery.

If you do spot what appears to be a deal, do your research. Is it cheaper online? Is it cheaper at another store? Is there another brand that costs less for the same quality? Taking the time to do your research will also make you think-twice and keep you from making those last-minute, guilt-inducing purchases.

Stick to a higher purpose

When it comes to buying gifts, what’s your “why?” What is your purpose for celebrating the season and what do you hope to accomplish by giving gifts?

I am not a person that’s overly monetarily generous throughout the year — I feel more comfortable giving in other ways. So the holidays are the one time where I am intentional about expressing my gratitude for the amazing people I have in my life by giving gifts that are unique to them and the relationship that I share with them.

My goal throughout the season is sticking to this intention. If any part of my gift-giving doesn’t fit this purpose, like buying a gift out of obligation, etc., then I try to refocus and make a change.

Remembering your “why” and honoring your own financial health and wellbeing throughout the holidays is key. Those two things will ensure that there will be no panic-inducing bill-paying come January.

Image Credit jspad

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