During the holidays your emotional desires and financial realities may be at odds. Here’s how to reconcile them.
For many people, the holidays stir up a host of emotional issues, which can clash with their financial situation. Whether you are considering spending money to travel home for the holidays or are tempted to splurge on gift giving, there is no time like the holidays for spending big to satisfy your emotions.
That emotional spending leaves many people overextended. One 2016 study found that 78 percent of Americans overspend during the holidays, and another found that 65 percent of Americans use credit cards to finance holiday spending. Consumers reported that they can take months to pay back that holiday debt.
It’s no wonder that many Americans report feeling a “financial hangover” come January. Although it’s tempting to spend lavishly during the holidays, doing so can cause you lots of stress and potentially have negative financial repercussions.
Marsha Barnes, a financial social worker and founder of The Finance Bar, a traveling financial hub that provides education to people in and around Charlotte, North Carolina, says that ultimately making smart financial decisions will give you more emotional rewards than indulging during December.
“These things tug at your emotions, so that inner battle starts to happen,” she says. “I might know that I need to be very responsible and financially savvy for obvious reasons — to pay my bills — but then what about all these things I love to do?”
Balancing emotions and finances is tough, but possible this holiday season. Here’s how:
Make Yourself a Priority.
People — especially women — tend to think of others during the holiday season. We want to give our children wonderful gifts and give our parents the experience of having the family home for the holiday. However, Barnes urges women to prioritize themselves and their financial stability.
“Don’t think of [traveling and gift-giving] as things that you have to do,” she says. “Because you matter too: your finances, your well-being, your level of stress and anxiety, it truly matters.”
Fulfilling your idea of a perfect holiday isn’t worth going into debt or straining yourself financially, so go into the holiday season with your financial well-being at the forefront of your mind as you make plans.
Take an Honest Look at Your Finances.
Now that you’re prioritizing your finances, take an honest look at what is realistic in terms of holiday spending.
“We can only do what we’re able to do,” Barnes says. “Definitely don’t skip past your numbers. Walk away from the emotions for one time, and then look at your numbers to see what you are able to actually do.”
When you’re looking at your finances, don’t include credit cards. Although being entirely realistic about your spending might put a damper on your holiday excitement it’s better to realize that now than in January after you’ve overextended yourself.
“A lot of times the holidays gives us this skewed vision of what we think we’re able to afford to do,” Barnes says. “And so we then we set out to do it instead of looking at it financially and determining what are we truly able to do.”
Have Open Communication With Your Family.
Oftentimes partners can disagree about holiday spending. Barnes recommends starting with a simple question: Where will the money come from?
“A lot of times what we forget is that Christmas is 24 hours then it’s over,” she says. “When it’s done… [people] are left to try to figure out how do I pay these credit card bills or how do I catch up on essential bills that I have. Am I using my mortgage or my rent to buy gifts?”
It can be tough to talk finances with your family, but it’s a good idea to prepare peoples’ expectations. If your family typically focuses on gift giving, Barnes suggests drawing names from a hat so that each person is only purchasing just one gift. If your budget doesn’t have room for that, gift time or write a heartfelt note, she suggests.
“The best thing you can do for yourself is to revaluate what the holidays truly mean to your family and not to get stuck in a mind frame that the holidays mean gifts,” Barnes says.
The holidays are one time of year when people throw caution to the wind and overspend. The other time is during the summer, when people want to vacation with their families. Barnes suggests planning ahead for both of these seasons, so that when the time comes you’ve saved all the money you need.
If you vacation with extended family choose your destination during the holidays so that everyone can begin budgeting a certain amount of money every month and enjoy vacation without any financial guilt. And as for the holidays, be sure to make 2018 the year that you save a bit every month to cover your extra costs.
Barnes says that learning to plan ahead for events that have an emotional pull requires dedication, but that ultimately knowing that you are on secure financial footing has emotional rewards of its own.
“You’ve now changed your lifestyle to be able to handle both essential things and those non-essential things of life,” she says. “In the long term that’s the win.”