The psychology of holiday spending… ‘Tis the season!

Don’t Let Holiday Spending Wreak Havoc On Your Down Payment Plans

Its a tricky time of year. Holiday spending accounts for 20% of annual retail sales. While gift giving, festive food buying, new outfit requiring events certainly merit an increase in our spending, it’s helpful to understand the psychology behind holiday spending in order to “rein it in” or simply bring some awareness to our holiday spending.

You want to stay on track, saving for that down payment right? A new home in 2016 will bring much gratification… But it’s not instant and therefore saving for it will not be as fun as say, the “me to me” gift staring back at you in REI or the fancy wrapping paper adorning the kids pile of presents under the tree, or the extra glass of $12 wine at 3 successive Christmas functions next week. We all feel pressure to buy gifts for our loved ones and it is NOT easy to resist the barrage of ads guilting us into payment plans for shiny, fancy things! Spending is not wrong… But it can be managed thoughtfully so that we get everything we need and enjoy the holidays but don’t have to mortgage the house to pay for it.

Why do we spend?

Studies show that we spend to exercise control. Consumers in general tend to shop when they are sad, they spend more impulsively and spend more money… On material things rather than experiences. It actually does alleviate sadness, giving us a feeling of being in control temporarily.  *There is actually no evidence to support the theories of sadness relief being a result of the distraction or pleasure in what we actually buy.

5 Ways to Avoid the Pressure of Holiday Spending: 

  1. Have a Plan. Take a prepared shopping list and stick to it. Empty excessive credit cards from your wallet and take just what you need to buy what is on the list. For many people, leaving cards at home and heading out with cash is more helpful. Every plan should include a small REWARD for you.
  2. Limit Temptation. Think about what you personally struggle with the most – make a list of where your money goes and be honest. Is it eating out? Clothes or shoes? Sparkling things or gadgets? Yeah… You need to take steps to limit your exposure to tempting situations. For example, don’t meet your girlfriend at the mall for coffee if your weakness is clothes, meet her at the coffee shop beside the Fedex store!
  3. Give up the desire to keep up. Scan your social circle and ask yourself if spend more when with them or worse, spend more to be like them! You don’t need to drop friends entirely, but you may need to change up how and when you spend time together. As far as “keeping up with the Joneses”, start by remembering that comparison leads to debt and dissatisfaction.
  4. Be accountable. Set goals and have a plan, then tell someone (reliable) about your financial goals and ask them to help you stay accountable and encourage you. Having a healthy mindset is helped by having a healthy lifestyle in general. Try fun activities, meditation or exercise.
  5. Practice gratitude. Appreciating what you already have is powerful! Begin by writing down 3 things today that you are grateful for in your life and refer to this list during the day.

holiday spending

Cheers to a more enjoyable and less expensive holiday season!

Do you know someone thinking of buying/selling real estate in 2016?

Working with me and mentioning this blog post will earn them a $500 credit at closing, so let’s make 2016 about responsible investments and an elevated quality of life!

 

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