Each year, households around the world experience both the highs and lows of the holidays. While many parents strive to provide the ideal Thanksgiving, Christmas, and other holiday experiences for their children, they often do so at the expense of household security and personal peace of mind by purchasing gifts and decorations on credit. Even worse, the additional stress of overspending often leads to adults arguing over finances in front of the very children for whom they’re hoping to provide an ideal holiday. Simply put, parents go into debt to pay for the trappings and trimmings of the season. First and foremost, too many parents OVERSPEND at the holidays, primarily because it’s so convenient. If it were more inconvenient, or if we immediately were to see the harm it does to our financial security and our household’s stability, we’d avoid it like the plague.
Those who overspend at the holidays do so, not generally out of necessity, but due to reasons at the heart of most financial problems. The top financial mistakes parents make at the Holidays address the questions of why, how, and where they overspend.
1. First of all, WHY do parents overspend?
That’s an easy one. Most households (meaning parents) have not spending plan in place. They often merely HOPE that everything will turn out fine, trusting that since they’re doing something generous, karma is bound to smile on them. Unfortunately, that’s not how our finances work.
TIP: Write down the amount of money available for you to spend on gifts this season. Write a list of individual’s you would like to give gifts to. Then divide the money among the individuals on the list. Now you have a fixed amount to spend on each gift. Keep the list with you when shopping (online or in the store) to remember what your spending limit is for each individual.
2. Besides poor planning, HOW do parents go about overspending at the holidays?
Whether using credit cards, store cards and store credit, or borrowing against the equity in our homes, going into debt at the holidays has become so common that a large percentage of our population actually EXPECTS to go into debt at every Christmas time.
The easiest way to address this problem is to take ONLY CASH shopping with you: no credit cards, no debit cards, no checkbooks, etc. While there is a safety and security issue involved, you cannot overspend if you take only the budgeted amount of cash with you.
3. Finally, WHERE do parents typically overspend when doing their Christmas shopping?
This answer is a bit more difficult since it’s been changing over the past several years. The mall used to be the biggest culprit here, but online shopping has become one of the biggest “impulse spending” venues of them all more recently. Remember that just because a website says something is on sale does not mean it’s a good deal, and it certainly does not mean you can afford the purchase. Make sure the actual dollar amount spent (and not the percentage saved) fits within your holiday spending plan.
Finally, be careful not to overspend at holiday events, like Christmas parties, festivals, dinners, and more. It’s far too easy to justify spending money we don’t have when we say it’s going for a good cause or when it’s for our children. If we can’t afford the expense, it matters little what it’s for. We can’t afford it.
Best wishes as you continue striving to live debt free. We know it’s not always easy, but it’s always well worth your effort.
If you have any questions, would like to discuss ways to meet your financial challenges, or, if you’re a current or former client, simply want to update us on your present situation, please contact us at your convenience. We are here to help you and look forward to hearing from you.
Have a great day!