It’s hard to believe but the holidays are right around the corner. It seems every year the stores are starting earlier and earlier with their holiday sales. It used to be that the Friday after Thanksgiving (Black Friday) signified the beginning of the holiday season. Today, the sales are starting earlier with many stores actually opening on Thanksgiving Day. The goal of all these sales and advertisements is very simple, for us to spend, spend, and then spend some more during the holiday season. But, just because they are urging us to spend more doesn’t necessarily mean it’s something you and I should be doing.

It seems every year I write a column, such as this one, encouraging people not to overspend for the holidays. Likewise, it seems every year at this time I read an article about people who have just finished paying for last year’s holiday gifts just as they’re about to start spending for this year. Going into debt is no way to celebrate the holidays. Therefore, we should all make a pledge to not overspend for the holidays. I know this is easier said than done; but, it is very important.

I recommend that before you even begin your holiday shopping, set a budget. You should know what you are going to spend in total for the holidays even before you begin to go shopping. It’s hard to know how much someone should spend for the holidays; but, one thing I can tell you is that if you have to put purchases on your charge card and you cannot afford to pay the balance in full, then you know you’re probably spending too much. Charge cards, especially during the holiday season, should not be used to finance purchases.

At the same time you establish a budget for your holiday purchases you should also decide exactly whom you have to buy gifts for. Once you do, it is much easier to allocate your resources. I believe establishing a game plan before you go shopping makes it much easier to stay the course.

Another thing that families can do to help ease the pressure people feel during the holiday season is to set a limit within the family as to the amount to be spent on a holiday gift. After all, we always tell children that it’s the thought that counts, not how much you spend. Maybe this is the year we actually put that into effect.

The reality of the situation is that despite an improving economy and an improved job situation, unfortunately, gift giving detracts from the true meaning of the holidays. The holidays are a time to spend with family and friends in order to enjoy each other’s company. It is not a time to go into debt and cause financial difficulty. All too often, that’s what the holidays end up being for all too many people. Therefore, before you begin your holiday shopping, consider talking to family and friends who you traditionally exchange gifts with and consider putting a cap on holiday gifts. I recognize this may be an uncomfortable conversation to have; however, family and friends should be able to discuss finances without being embarrassed.

The holiday sales and push from retailers has already begun. As consumers, you and I can’t fall prey to their tactics. Don’t get caught up in that vicious circle of spend, spend and spend some more; rather, be smart this holiday season. I can assure you that if you don’t have the financial pressure that inevitably happens during the holiday season, you will enjoy the holidays the way they’re meant to be enjoyed.

Good luck!

 

If you would like Rick to respond to your questions, please email Rick at rick@bloomassetmanagement.com.