How to avoid holiday spending regrets

Choose presence over gifts this season

The desire to offer gifts in the course of the holidays is deeply rooted in many individuals. “The biggest factors driving this desire are our own thoughts and feelings,” said Michelle Johnston, a registered psychologist at Take Care Therapy Co. Family traditions and assumptions about how others perceive us based on the gifts we give are also significant motivating aspects in determining the opulence of fabric items or experiences we purchase for others, she added.

Instead, Johnston encourages individuals to make “more mindful and values-driven choices” in the course of the holiday season. Instead of a physical gift, she recommends giving the gift of time: make something handmade, enjoy a reasonable vacation getaway, or find one other meaningful solution to be together.

Holiday debt can take a psychological toll

The burden of overspending exceeds your wallet. It also can impact your mental health.

“When we feel pressure to give extravagant gifts, we may engage in behaviors beyond our means, increasing credit card debt or diverting money from other important financial goals such as saving and investing,” Johnston said. “This can lead to increased stress, guilt, shame or disappointment when the holidays are over and we are forced to deal with the consequences of our spending habits.”

Technology has only increased the temptation to spend money. “We walk around with luxury items in our pockets (our phones) every day and they are programmed to constantly remind us how to spend money – so there is a lot of money pressure all the time,” said Kathleen Daunt, a financial planner on the New School of Finance. “It’s important to pause and give your brain enough time to really think about the emotional return on investment rather than just rushing to buy.”

Roger Wardell, financial advisor at Edward Jones, reminds clients that “a one-size-fits-all approach doesn’t work.” Instead, he advises them to create a personalised plan that supports long-term goals while also accounting for short-term priorities like vacation spending. You must “go deeper and decide how much you can spend so that you’re in good shape in the new year,” he added.

Automate savings for stress-free holiday spending

All three experts agree that automated deposits can assist make spending guilt-free, whether it’s for travel, dining or holidays.

“By breaking up the total amount we might spend into smaller monthly contributions, we can make saving for the holidays much easier, rather than pouring a large amount of money into gifts all at once,” Johnston said. “If you can set it up so that deposits happen automatically when you get paid, you are less likely to spend the money because it has already been allocated somewhere else.”

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Additionally, targeted gifting is vital to controlling costs. “If you’re shopping for five people and don’t want to spend more than $100 for each person, your magic number is $500,” Daunt said. “Set an automatic savings every payday at the beginning of the year to ensure you have the $500 you need for gifts by the end of the year. Even if it’s too late this year, you can implement this for next year and feel confident that you have this plan in place for the future.”

Daunt adds that it is best to remove payment information from online stores in your phone to stop impulse purchases. Also, before making any purchase, stop and ask if the enjoyment is definitely worth the price.

Progress, not perfection, guides targeted spending

Remember that learning to spend intentionally is an iterative process. “Sometimes, despite our best intentions, things don’t go according to plan,” Johnston said. “If you end up spending more than expected, try not to judge yourself. Instead, give yourself some grace and view it as information or an opportunity to learn more about your patterns and make different choices next time.”

Daunt echoes this belief, arguing that there may be at all times hope even when the best-laid plans aren’t implemented. “Even if it’s too late this year, you can implement this for next year and feel good that you implemented this plan going forward,” she said.

When the vacation season is over, take a have a look at where recent opportunities might lie. “If you can save some of your holiday budget as we start the new year, you can take care of your future by contributing to a tax-free investment account,” Wardell said.

Rewrite your holiday story this 12 months. Give with intention, set spending limits, and begin the brand new 12 months feeling on top of things. Your future self will thanks.

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Via Canadian Press

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