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For most families, the season of giving is the season of spending — and no other time of year offers more opportunities to spend too much. But if you can recognize and avoid a few common money mistakes, you can survive the season with your budget intact.
GOBankingRates spoke with Sam Madar, MBA, the founder of Soul Wealthy Financial, a boutique financial planning firm that approaches financial health from the perspective of personal and emotional wellness. A certified corporate financial planning and analysis professional, Madar spent nearly a decade in the corporate world before launching her firm. A former Big 4 public accounting auditor, Madar holds a FINRA Series 65 license and is a candidate for CFP certification.
These are the top three holiday money mistakes she says are most likely to get families into financial trouble this December, with tips on how to avoid them.
Assuming That the Best Gifts Have Price Tags
For most people, the concept of a gift involves merchandise you pay for at a store. But at least some people on your shopping list might be happier with the kind of present that money can’t buy.
“We’ve been conditioned as a society to ask for physical gifts,” said Madar. “But it’s important to remember that it is not everyone’s love language. Things like acts of service, words of affirmation or quality time might be what others truly want or need. Unfortunately, those things cannot be wrapped up and put under a tree.”
Do They Want Merchandise? You’ll Never Know Unless You Ask
People wrap presents because the surprise is part of the fun. But it kind of defeats the whole purpose if it’s a surprise that disappoints. A simple conversation can help you give a gift that’s well received — and might even keep your money in your bank account instead of a store’s cash register.
“Before spending hundreds of dollars at Target or Amazon this holiday season, take the time to ask your loved ones what they really need,” said Madar. “Maybe it’s a home-cooked meal, a babysitter for a couple of nights or someone to be there and listen without giving unwanted advice. Doing this is not only more thoughtful to the recipient, but it can also save you money. It’s a win-win!”
Failing To Discuss Spending Limits
Madar also suggests openly communicating about price ranges with family, friends and anyone else you plan to trade gifts with or organize holiday parties with. If you don’t, lopsided exchanges are likely, which can cause resentment or embarrassment and lead to one party overspending and the other feeling like they should have spent more.
Kids Make Lists for Santa — Adults Should Make Them for Each Other
Even if you agree on a spending limit, you can still waste money by springing for a disappointing gift or receiving something you don’t want instead of grabbing the opportunity to let someone else pay for something you need.
“Combat this money mistake by creating an Amazon wish list and sending the shareable link to family and friends,” said Madar. “This way, you can guarantee you’ll receive things you actually want.”
Ask them to create and share lists of their own so you can make every dollar count.
Letting Retail Marketing Guide Your Holiday Spending
The holiday season is the season of sales, and when every store and website seems to be slashing prices on all the things you need and want, it’s easy to justify deviating from your budget to cash in on as many deals as possible — and that’s the whole point.
Sales are designed to induce overspending that you’ll almost certainly come to regret.
“The holidays are an excellent time to shop for sales,” said Madar. “However, many sales tactics can distract us from using our intuition. Pressure to take advantage of limited-time discounts and BOGO deals can quickly turn into buyer’s remorse, especially if the product or service is non-refundable.”
Approach Sales With a Plan and Never Buy on Impulse
There are certainly deals to be had, but marketers use holiday sales to trigger FOMO — buy now or miss your chance forever.
“To combat this, read the fine print and tune into your emotions and gut to ensure you’re making an informed decision,” said Madar.
A holiday shopping budget is the foundation of informed spending decisions. Once you know what you can spend overall and how much you’ll spend per person, approach sales proactively by researching which items from your shopping list different sellers are discounting. Stick to your list, stick to your plan and stick to your guns — by shopping strategically and resisting the urge to buy on impulse, you work the sales instead of the sales working you.
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