’Tis the season of spending folly. But there’s help for that.
As fun as the holidays can be, they can be brutal on a savings account. We talked to Deborah Price, CEO and founder of the Money Coaching Institute, about how to head off the anxiety and overspending habits that can sabotage our holiday experience†.
In an era when many Americans don’t have $400 in emergency funds, we spend, on average, $794 on gifts each season‡. Why?
Deborah Price [DP]: Most people feel a sense of obligation that often doesn’t take into consideration someone’s actual financial situation. This can leave many people deeply conflicted.
If they don't give gifts in alignment with other people's expectations, or even their own expectations, they become overwhelmed or suffer emotional, internal turmoil. Spending becomes much more emotional and far less practical or rational. That dynamic happens year-round, it just escalates during the holidays.
It [spending over budget during the holidays] can be especially tough on parents, right?
DP: A compensation issue also comes into play. After a year of maybe overworking and not being able to spend time with children or family, parents may try to compensate by over-giving. It’s not necessarily conscious, but sometimes we give out of guilt of not being available to people we love and care about.
What can people do to help prevent overspending during the holidays?
DP: One way is to plan ahead. Calculate how much money you have left after you pay all of your living expenses and decide how much of that you want to allocate for holiday gifts.
Once you have that number, you can 1) create a holiday budget by listing the people you need to buy gifts for, 2) decide how much you want to spend on each person, and 3) write out a list of what kinds of gifts you want to purchase.
That way it becomes a more practical, logical process. The more time you give yourself, the more opportunities you have to take advantage of savings and bargains on certain items during the year.
If your budget is limited, there are other approaches. You may want to think about something you can do rather than give, or an experience you can share. Things like movie passes or tickets to an event can be less expensive and provide more opportunities to share in the experience with a loved one.
And then there’s the family dynamics of the holidays.
DP: Holidays can be high-trigger seasons for family dynamics, especially if there's been a loss of a loved one or a setback that happened in the last year. So, if you’re really feeling stressed and not certain how to manage the spending that typically follows the holidays, you might want to book a session with a money coach or a therapist.
Therapists can help you understand the why behind what is going on with your family dynamics. Whereas, money coaches can look at what could be stimulating poor spending behaviors and how to manage it.
Is there work we can do ourselves?
DP: It can be helpful for people to sit down and reflect on their values. If you try to be mindful in your spending approach and give yourself time to do everything on a much calmer, controlled basis, you can help alleviate your anxiety and excessive spending.
When you start spending and shopping in alignment with your values, you can feel better about whatever you're doing.