I remember reading a pretty alarming CNBC article last year, which found that 24% percent of millennials still carried debt from their last years’ Christmas shopping and 63% of people in general used debt to finance Christmas gifts. Now I don’t know if this study has been updated for this year, but I highly doubt this improved significantly. This past year has been a great year in the economy, labor markets, and financial markets, but the issue of overspending is a matter of habit and disciple rather than income. I might be a week too late writing this post, but perhaps you haven’t had enough time last week and over the weekend to dig yourself into a hole just yet.
Nothing to Prove
As part of my profession, I have a lot of insight into many different peoples’ finances and budgets (or lack thereof), and I’ve learned that the holidays can really set you back if you are not careful. Generosity is a good virtue to have, but when it comes to gift giving, you have to set some boundaries. A client I’ve been working with for quite some time had a real gifting problem. She couldn’t help but spoil her grandkids, daughter, and friends; it took some serious conversations regarding her priorities and wellbeing before we could start getting the matter under control.
Unless you plan on getting a second job to fund your gifting budget, my advice would be to buy what is within your budget, not what would fit into someone else’s lifestyle. You have nothing to prove. As a matter of fact, people will respect you all the more if you don’t go out of your way to please them. A few weeks from now the holidays will be over, but you could be stuck with debt for the rest of the year.
Buy Now, Pay Later Scam
One of the biggest mental scams these days are the “Buy Now, Pay Later” options. Credit cards have a negative connotation for many people already, so people try to stay away from over-buying on credit cards, but now there is this new, wonderful option that makes people feel less guilty for spending money they don’t have. Don’t fall for it. Zero interest? Doesn’t matter. That money is not going to magically appear six months from now. I understand if your heater or an appliance broke down, then debt might be the only option, but Christmas gifts? Not worth it.
More Thought, Less Money
I’ll make a confession here; I’m guilty of overspending on gifts rather than putting thought into personalized gifts. My wife, on the other hand, is very creative and gets the kids involved in crafting a personal gift that is more memorable and meaningful than any pricey item she can buy. I go out the day before and search for the nicest thing I can find without looking at the price tag. That can be a problem. So, consider spending a little more time and doing something a bit more thoughtful but cheaper rather than just going with something that will awe someone because it’s pricey.
One thing I’ve come to realize is extravagant gifts actually don’t impress; shinier isn’t necessarily more memorable, and spending more doesn’t equal loving more. I have a running joke with my wife when I come home sometimes and tell her about something I wanted to buy her. She’ll ask me, “Well, why didn’t you?” and I’d answer, “It’s the thought that counts. At least I thought about it.”
Don’t do that either.
Do something nice, get something nice, but don’t break the bank.
Most importantly, don’t let the pressure and hassle take away from celebrating the birth of our Savior and quality time with family and friends.
Sincerely,
Vladimir Nikitenko, CFP®
Silver Penny Financial
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