Connect with us

Advisor

One-Click Spending and the Money Misery Hangover

Published

One-Click Spending and the Money Misery Hangover

Pull out your smartphone or tablet, or sidle up in front of your computer, go to a shopping site, and click on “buy.” Or just tell Alexa to order for you.

Buying stuff has never been easier. Buying stuff during the holiday season is on another plain entirely. You have to lavish your loved ones with gifts, right? And your work colleagues. And as long as you’re browsing, here are a few things you need.

It’s a good time for a getaway, and here’s a bargain on a Caribbean trip for the whole family. Or you’re having the extended family over, and you could use a whole new set of tableware, and here it is at 30% off. Black Friday sales begin even before Thanksgiving now, so of course it’s time to order that state-of-the-art smart TV. And why stop there…

You can probably guess where this is going. What happens when the party winds down? The aftermath of holiday spending can feel a lot like the morning after a New Year’s Eve gala—except a money misery hangover doesn’t go away with two ibuprofen tablets.

Overspending can lead to long-term debt, anxiety, marital crisis and credit problems.

The majority of Americans—61%–actually dread the holiday because they know they’re going to feel pressure to spend too much, according to a new survey from Lending Tree.

Some other interesting key findings from the survey:

  • A typical consumer will spend an average of $602.65 on winter holiday gifts this year—or $850.38 if they are parents of children under 18.
  • One in three consumers are losing sleep worrying about how they’ll pay for the winter holidays.
  • About a quarter of respondents expect to incur debt this holiday season. Nearly one in five are still paying off bills from last year’s holidays.

I’m saying this not because I’m a grinch, but because I know it’s possible to head off money misery. If you happen to have a kind of Pavlovian response to holiday bells and carols, subconsciously hearing the words “spend, spend, spend,” you should know that your response is the result of a learned attitude about money—what I call your money mindset.

Your mindset is developed in childhood, based on what you saw your parents do with money. If they spent with reckless abandon, you will probably do the same-because it’s “normal” to you.

But your situation might be different and extravagant spending might just not be possible or prudent.

For many Americans, our necessary expenses are a much greater burden in proportion to our income then they were for our parents.

For example, the average cost of tuition, room and board for college was approximately $9,438 in 1980, according to the U.S. Department of Education, versus$46,950 in 2019. The average cost of an automobile in 1980 was $7,000 and gasoline was approximately 90 cents per gallon, versus $37,185 for a new mid-sized sedan and close to $3.00 for a gallon of fuel today.

You can avoid uncontrolled spending, though, by getting a grip on your money mindset and aligning it with your values and financial resources.

Follow these eight steps to a happier morning-after once the holiday shopping frenzy is over:

  1. Understand where your money mindset comes from. Then ask yourself: does it support you or does it drag you into misery?
  2. If over-spending is a constant issue in your life, especially if it creates anxiety or marital problems, seek help from a qualified therapist or counselor.
  3. Draw up a spending plan that you can sustain on your income. Decide on your spending allotment for holiday gift giving before you shop.
  4. Research products and the range of available prices before you buy. There are enough online resources to help you make wise spending choices.
  5. Check out the services that offer special incentives when you buy online. Joinhoney.com, for example, automatically applies discount promotional codes, while Rakuten.com gets you cash back from many e-commerce sites.
  6. Have a money conversation with your partner and family. Make sure you’re on the same page.
  7. Commit yourself to making incremental improvements in your spending habits and celebrate each success without spending more money. You can take a few minutes of down-time just to appreciate how good it feels to live with more savings than debt, for example. Those feelings are priceless.
  8. Make holidays less about gifts and more about festivities and shared times together.

The holidays should be a joyful time when you can celebrate the season without the specter of unmanageable debt hanging over you. Give yourself the gift of peace and contentment by making good decisions for yourself and your financial well-being. Happy Holidays!

Related: When it Comes to Financial Decisions, KISS and Know your SWOT

Continue Reading

Trending