The holidays are a special time of year, when many of us look forward to time together with friends and family, and to holiday traditions we love, not the least of which is gift giving.
Unfortunately, far too many of us overspend during the holidays, setting us back from reaching our financial goals and leading to stress and regret.
Nearly one in four people say they go into debt because of holiday spending, according to a recent Credit Karma survey. That survey also found that nearly half of us believe that social media targeting has caused more people to spend beyond their means.
According to the 2018 Deloitte Holiday Survey, consumers expect to spend on average $1,536 per person this holiday season, up more than $300 from last year.
The survey also found that a large majority of consumers – 78 percent – plan to shop for themselves in the lead-up to the holidays. Those are big numbers, especially when you multiply them times everyone in a family.
If you’re in the large majority of consumers who’ve overspent in holidays past, you can rein in your spending this year by remembering to focus on what you truly value.
The FIRE (financial independence, retire early) movement is growing in large part because so many people are realizing that more stuff doesn’t make them any happier.
Instead of spending all our money keeping up with the Joneses, we save that money and use it to buy back our time, often shaving years or even decades off our careers. And the principles of the FIRE movement apply perfectly when planning out your holiday spending. You can use them whether you wish to live a work-optional life or not.
First and foremost, the FIRE movement asks people to think about what they value most in life. Is it having the latest gadgets, a new car every few years and a big house? Or it is having the freedom to choose how you spend your time, rather than an employer deciding for you?
Apply this same line of thinking to the holidays, and ask yourself what you love most about this time of year. Is it the quality time together with family or friends? Snuggling up with someone special in front of a warm fire?
Think back to holidays in past years and ask yourself what you remember most. Can you remember all the gifts you’ve received, or do those fade into the background of your memory? For gifts you’ve given that others were excited to open, did they get lasting joy from the gifts or was it more fleeting? Notice everything you love and remember that wasn’t about the presents at all.
When you focus on what you value most about the holidays – and about life in general – it’s far easier to moderate your spending and to avoid overspending. But that doesn’t mean you need to give up gift-giving or holiday spending entirely. The key is to do it mindfully.
For example, research shows that the most appreciated gifts are those the recipient asked for, not the gifts we painstakingly seek out to surprise them, often blowing the budget in the process and exposing ourselves to more opportunities for impulse purchases.
Knowing that, go for the quick, easy choice by shopping off everyone’s wish list. That also minimizes your time on online shopping sites, eliminating the need to use superhuman levels of willpower to turn down all the goods marketers tempt you with. Best of all, you know the gift you give will be used and enjoyed, not discarded or forgotten, and that’s always the money best spent.
Take it a step further and question whether everyone you normally buy gifts for truly needs a gift, or whether a holiday card or plate of homemade cookies might show how much you care just as well. Many people are relieved not to have to reciprocate a gift, so being the one to break the gift-giving chain may very well be doing them a favor.
When planning holiday events, emphasize time together with friends and family over the gift-giving aspects.
When shopping for yourself during holiday sales, distinguish needs from wants, consider keeping items in your online shopping cart for a week or more to ensure you’re not making an impulse buy, and minimize your exposure to ads on social media.
If you set a budget for the holidays, deemphasize the gift-giving aspects, and remind yourself as often as necessary what’s truly important to you, you’re far more likely to enjoy truly happy holidays with no financial regrets.
Tanja Hester is the author of Work Optional: Retire Early the Non-Pennypinching Way (to be released February 12, 2019), creator of the Our Next Life early retirement blog, and co-host of The Fairer Cents podcast. She retired early at age 38 from a career as a political consultant.