Holiday spending, especially for the Christmas season, has become for many a yearly tradition. Outside of shopping for gifts, if you aren’t buying new curtains and bed linings, holiday decorations, new clothes, new gadgets, and appliances, just to name a few things, it doesn’t really feel that much like a holiday. As wealth builders, however, traditional holiday spending should be done with a different mindset. Wealth building requires intention, which means that the spending habits and decisions you make concerning money should maximize your money outcome.
Holidays, whether Christmas or otherwise, typically causes people to overspend, not just on physical items but on events as well. It’s easy to get caught up in the hype of the parties and the outfits, and with social media feeding the YOLO appetites, the temptation to take advantage of the “buy now, pay later” opportunity with the swipe of a credit card, makes it so much easy to “get it and forget it” until the bills come knocking.
Over-emphasizing the need to have a better relationship with money is necessary during this time because too often people do so well in their financial journey throughout the year only to lose momentum or find themselves scraping to put the pieces back together having racked up their expenses and making bad financial decisions during the festive season. This is why it is important to have a plan, preferably before the holidays come around, so that when everyone else is getting high off the hot promotions and shining new things, you know exactly what your money will be doing. Yes, maximizing your money outcome for the holiday takes discipline, but would you rather work toward a broke life or a wealthy one?
The key to using your holiday spending to amp up your money outcomes consists of very simple practices that when put in place can help you to stay on track with your wealth journey. Here are a few ways we recommend to our clients to help them get through the holidays while maximizing their money outcome:
- Save/Invest specifically for the holidays – Wealth building does not have to put a damper on your holiday fun. A lot of our clients have children that look forward to the Christmas holiday each year. One particular client with a family of four found that at the beginning of each year she and her husband were high in debt and struggled to pay their bills for the first few months of each new year. It wasn’t because they weren’t both earning a good salary, but overspending at this time of the year would always wipe them out, so we recommend that they make it a family affair to invest specifically for Christmas shopping and it worked. Everyone has their favorite times of the year, Independence celebrations eg. on July 4th to some maybe involve more spending than Christmas for others. Identify the holidays you generally spend the most and create a holiday fund account. Estimate how much you would like to spend to determine how much you will need to save.
- Create a holiday budget- You can never go wrong with a budget and creating a separate one for the holidays is a great way to keep you from overspending and getting the most out of your money. Make note of what you will be spending and how much you can reasonably afford to spend and ensure that to stay within the parameters of your holiday investment fund.
- Shop Smart – Take advantage of reward cards, coupons, membership perks, and deals where possible. Be careful however to read the fine details for any additional charges that may be incurred. Be smart about how you spend by taking advantage of discounts and suitable alternatives (and I don’t mean knock-offs here), for eg instead of purchasing name brands opt to purchase a non-branded item that looks just as great. If you are serious about wealth building, name brands should be an easy sacrifice to make.
- Buy assets– Lastly instead of buying more things you really don’t need, buy things that appreciate in value or that can multiply your money.
Wealth is possible but it’s also a choice and if the choices you make aren’t in alignment with your financial goals then wealth won’t be achievable in the long run. Let this Christmas and the new year catch you in a “money mood” because of the wise money choices you make this holiday season.