The holidays are a time for family and joy . . . but unfortunately it could also be a time to rack up those credit card bills. Here are some tips to help enjoy your holidays without spending the rest of the year paying for them.
Grandma Betty has a philosophy when it comes to buying for her kids: the holidays are the one time of the year to be overwhelmed with gifts, food, family and excitement. It was like that when she was a kid and she did the same for her children. Now, with seven grandkids of various ages, she tries to keep that expectation alive. Her holiday strategy is always this: a book, clothes and then something special, like a toy if they are young and maybe a tech gadget if they are older.
It’s tougher now that she is on a fixed income and prices today seem outrageous. A sweater can’t come from the tried and true department store anymore and four-dollar windup toys are just a quaint memory. Grandma Betty shudders at what last holiday season cost her and this year will likely cost more, but her grandchildren are worth it . . . and next year she’ll have two more to buy for …
Most people are or know a variation of Grandma Betty and many people have a similar problem as her. Betty is compelled by habits to overspend for her family, regardless of how large her family is or how small her pocketbook may be. Cutting back on spending just isn’t something that Betty would want to do or even consider.
Canadians are the victims of their own kindness. Consumer debt in this country continues to soar and we are changing from a country of savers to spenders.1 The holiday season may be the time of the year that typifies the problem, as we overindulge in kindness one month, only to face burdensome credit card bills afterwards.
So, time to pack up the holiday decorations? No, not by a long shot. Gary Direnfeld, social worker, relationship specialist, speaker and author of Marriage Rescue: Overcoming Ten Deadly Sins in Failing Relationships and TD’s Zeljka Walker, Investment and Insurance Advisor, both offer some great insight on why we get trapped into spending too much money and how we can still meet our gift needs and enjoy the holidays.
Direnfeld says that often the impetus for overspending is closely connected to our relations with family and friends. For some of us, our busy lifestyles may make us feel we are not the best parents or children, so the guilt may drive us to compensate by overspending on gifts. The neighbour’s kid next door got the new computer gizmo, how can our kids not get one too?
Some of us may overspend on gifts to deal with stress or conflict in a relationship, as a type of apology, or to help build a relationship with someone. It may be hard to stay mad at someone when they are giving you an expensive present …
Needless to say, money can’t buy love, but for many people, the lines blur between giving gifts generously and spending too much just to make yourself feel better.
“Generally, the reason people overspend is that they are hoping to gain someone’s affections or make themselves feel better in the relationship. Some people have learned how to base their relationship with people on ‘things’ rather than on time spent,” Direnfeld says.
“So their purchase of ‘things’ is an expression of caring and love, and if they can’t express their feelings in other ways, they may feel they have to overspend to demonstrate the extent to which they value the relationship,” he says.
Direnfeld says there are other reasons over-the-top shopping has little to do with the holiday spirit. Some people shop as a diversion or for stress relief in the same way some people may over-eat: buying something nice and shiny (for yourself or someone else) is an effective — but temporary — way to take your mind off life’s pressures. Unfortunately, like any habit, the excitement of shopping fades quickly and can only be satisfied by more shopping, a behaviour that can be brutal to your finances, not to mention the risk of becoming a “shopaholic.”
Direnfeld says it is no easy battle to change your shopping habits. Relentless advertising in the mall, on TV and social media connects family happiness with buying gifts. And if our family traditions demand gifts galore, then people are hard-pressed to turn their backs on what are perceived as socially-accepted family values.
The key is courage, Direnfeld says, to have an honest and open conversation with the people involved to tell them you have a new way of giving this year. Instead of an extravagant store-bought gift like that shiny new smartphone, express what the relationship means and then settle on an appropriate gift that doesn’t equate worth and meaning with the dollar value.
The holidays often bring out the charitable spirit but “people are often too generous at this time of the year,” says TD’s Zeljka Walker. “They want to show people appreciation for the kindness they have received all year round, but that doesn’t mean they have to push themselves into financial problems.”
“Getting into the mood of the holidays and getting pulled into a shopping frenzy, that’s the time when people can be surprised by large bills in the new year. It’s all about planning beforehand, knowing how much you can spend and knowing you can pay those bills painlessly when they come in,” she says.
To avoid this unpleasant outcome, the big first step is to have a budget and then a plan on how much you can afford this holiday season. This should be part of a wider financial strategy that tracks how much money comes in, how much is allotted to regular bills, what goes to savings and what can be directed towards holiday gifts, she says.
“If you don’t have self-discipline, this is the time to learn. Get to know yourself and discover what makes you stray from your budget or what is motivating you to buy an expensive gift. Then you can learn to control those feelings and save money,” says Walker.
In addition, if you need help, many people use mobile apps from their financial institutions that track money transactions in real time. This is useful; if you have set a budget, you can carefully track your income and spending, see if you are exceeding last month’s tally and make sure you don’t overdo it.
After making an effective budget, make your list and split it up according to some logic so that you are giving enough money to the ones closest to you, she says.
Don’t forget to cover your whole holiday costs, including decorations, entertaining, last-minute gift-exchanges, host gifts, impromptu holiday dinners and giving to charity. Combine it with a plan to make sure you have everyone included, even those who are getting homemade gifts or baked goods, she says.
Finally, Walker says, if you need help setting a budget and making it work with a larger financial plan, contact your financial professional to see how they can help you manage your money, get a plan going and save not only during the holidays but for all your goals in life.
- National balance sheet and financial flow accounts, second quarter 2017, Statistics Canada, Sept. 15, 2017, accessed Oct. 24, 2017, www.statcan.gc.ca/daily-quotidien/170915/dq170915a-eng.htm?HPA=1. ↩