How To Tap The Brakes On Holiday Spending
A friend of mine races Corvettes and when he shared some lessons about race car driving, I immediately drew a connection to finance (because let’s face it, that’s where my head is usually at).
We were discussing how he manages to take the turns on a racetrack at 120 mph. He said you need to anticipate the turn and learn to brake before making it. In other words, it’s too late to brake when you are already in the turn.
He said when he first learned how to do this, they would place a sunscreen on the windshield to teach him to look for the apex off to the side to anticipate what’s ahead rather than looking straight ahead.
Finding Your Spending Limits
November marks the start of the holiday season. So, with finances and holidays on my mind, I quickly equated his ability to learn to brake before it’s too late for holiday spending. We all too often focus on the holiday straight ahead of us, forgetting about the fallout.
Perhaps looking to the side would give us perspective as to the ramifications of our actions. Asking questions such as: How much can I really spend on a gift? Do I need to buy multiple gifts? Will I be able to pay off the credit card when it comes due or will I still be paying it off come May?
Every article I have read about controlling your holiday spending has the same suggestions. This tells us there is no “holiday magic” when it comes to spending. Stick with the basics and you should be in good shape.
Let’s run through some of these suggestions! First we’ll cover what will save you the most money but will also likely be difficult to actually follow through on. Then, we’ll give you some ways to get smarter about your holiday spending without turning into the grinch!
What You Could Do to Save… But (Probably) Won’t
Setting expectations and goals for spending
In other words, let people know you won’t be going overboard this year and they shouldn’t either.
Creating a list and sticking to it
Like that’s easy! There are always those add-ons: i.e. should I get something for my brother’s new girlfriend, or, how about the person who delivers my mail…what’s his name, again?
Setting a budget and stick to it
Even better - when does that ever happen? Ryan Fleisch from Adobe Analytics says it is expected we will spend $143.7 billion on the upcoming holidays this year. That’s correct, BILLION. So how could we realistically expect not to be part of something so big?
Shopping smart, online, and early
No matter how you do it, it’s still shopping and that means spending!
Using cash instead of credit cards
This is unlikely to work since there are ATMs everywhere you look.
Not going crazy with the décor
Easy to say until the next Grandin Road catalog arrives in your mailbox.
Getting crafty and making things yourself
Unfortunately this only works if you actually are crafty!
Buying last season’s electronics to save money
Invest in a slightly older model rather than the latest and greatest. Who wants an iPhone 4? Or a “not so smart “ tv?
Holiday Savings Strategies That You’ll Actually Implement
So, as you can see, some of these suggestions not only are unrealistic but also take away from the holiday spirit of giving. In contrast, here are some of the ideas that I like and have actually used so I know they work:
Rather than a gift, why not exchange events?
Buy tickets for a movie, go to dinner or a show and enjoy the company of your friends and family. Yes, this is still spending, but—let’s be honest—you probably will be doing this at some point anyway. Instead of a gift today and an event in a month, you can do it at the same time and everyone wins!
Agreeing to only exchange a precious ornament for each other’s trees
Make it a special ornament that you just wouldn’t buy for yourself, so it is something cherished each year. Certainly less expensive than an iPhone!
Using some of your points to buy gift cards
If you do frequently use credit cards (and pay them off each month!) you likely have acquired points. Use these points to give gift cards for your loved ones. They’re happy and you haven’t spent a dime.
Giving useful memberships or subscriptions
Some of my favorites include AAA memberships, a one-year subscription for tickets to a local movie house or community theater.
Buying stocking stuffers vs. big gifts
Word of caution—little things can be pricey, so be careful!
Hosting Secret Santa
If you have a large family this can work well. Everyone draws a name and just buys one gift. You can set the price and even if you agree to spend, say, $75-100 you aren’t buying for every cousin you have but only for one. Then when it’s time for opening gifts, everyone gets something. Plus, it’s fun to guess who your Secret Santa is!
Giving Group Gifts
One gift family to family or one great toy or video game all the nieces and nephews can play when they are at Grandma’s house. This way everyone is pooling their money for a larger and often more special gift.
Gathering the family and friends to help out at a charity event or soup kitchen
Bring your loved ones together to give back to your community and then all go out to celebrate the season and enjoy each other’s company. In the end, the holiday season is about being with loved ones and spreading holiday cheer. The magic of the holidays isn’t felt through gifts but through acts of service, singing carols, warm hugs and maybe a cup of wassail!
So as you can see, there is no miracle when it comes to controlling holiday spending, but as my race car driving friend would say: “always anticipate what’s ahead and stay focused to stay safe!” In this case, make the focus be faith, family, and friends and you won’t miss the turn!
Happy Holidays!
Written by Lori Johndrow
Lori is a 35-year veteran in the financial services industry. She is both a Retirement Income Certified Professional ® and Accredited Investment Fiduciary ®. Both areas lend themselves to helping her aid people in creating lasting wealth.
