I could not resist an opportunity to encourage everyone on the importance of staying within your holiday budget this December! It is not uncommon for people to let loose and blow it this month. Early in my career I worked at a bank and witnessed customers taking out small personal loans in January to pay off their credit cards that they maxed out in December. Now these are extreme examples, but it illustrates how easily people can fall victim to the commercial pressures of holiday spending.
In fact, I was listening to an audio book this week that was specifically talking about consumers making large purchases. To sum it up, if you cannot save for something every month, you will not be able to make the payment on it. If you haven't been able to save all year long to fund Christmas, then your Christmas spend should reflect the amount you have been able to save. It’s simple, but it is not easy.
I would like to share 3 holiday spending tips that can help...
Focus on experiences.
This year, for the first time, my family is going on a road trip to the mountains after Christmas. Their gift will largely be the trip, and the waterproof snow pants and jacket needed to enjoy some skiing (I compared the price to rent versus buy before making the purchase). But as my kiddos grow up and are about to "fly the coop," I am savoring every opportunity to be with them. This gift will provide a lifetime of precious memories - hence, the gift that keeps on giving.
Evaluate the cost- not just the price.
This has practical applications beyond the holidays. If an Item is $100, do you know what this is costing you? Meaning, if you are a paid hourly worker, how many hours of work did it take to pay for this? If you make $20 an hour, the answer is 5 hours. If you are a salaried worker, you must calculate your hourly wage. Take the number of hours you work per week and multiply it by 52 weeks out of the year. If you work 40 hours a week, then the number is 2080. Then divide your salary by 2080. If you make $50,000 per year and work 40 hours a week, then your hourly wage is $24 an hour. So, you had to work 4 hours to buy that $100 item. You can also calculate an item's cost as a percentage of your monthly salary.
Could you create something that is more personal?
Christmas is about celebrating the birth of Christ. Not the gifts. Show your love for your friend or family member by creating something personal, that the receiver will cherish because it was created by you. I have a client that is a creative writer, and instead of a gift, gave his mother a letter detailing his most precious memories of his mom and their time together. I cannot think of any material thing I could receive more precious than that. I have another creative client that crafted unique jewelry for their friends and loved ones, out of art supplies she already had in her craft stock. These are examples of precious treasures created with very little money spent. One year, I made my mom a cake that was from a recipe found in a magazine that we all "oohed and ahhed" over. It took me HOURS and I managed to burn the scratch made caramel 3 times before finally being successful, but she loved it and it meant so much to her because I had taken the time to make it for her.
So, you should ask yourself:
Is the item worth the hours you had to work to purchase it?
Will it bring joy or happiness in the amount equal to the sacrifice, hard work, and time spent?
Are you buying it in haste, therefore spending more than you planned?
Are you buying more than you can afford because the person receiving it will be spending an equal amount?
I hope you all enjoy this Christmas season and take a moment to slow down and pump the brakes and focus on what really matters. Remember, it is the thought, not the price tag, that counts.