Is it just me, or do people seem to go more and more crazy each Christmas? I feel like Christmas expenditure has just run way out of control, and we’re beginning to lose sight of what Christmas really means, and what its true value is. Do you tend to just get the credit card out to cover it all? Do you spend way over what you really should on extravagant gifts, just because the consumer trend is just to spend more and more and more and…
I think maybe Christmas is just when we see all the problems of American financial lives really put under the microscope. If we were to think about modest living at Christmas and apply some of the same principles year-round, we could all have healthier financial lives. We could all become that next-door millionaire.
Christmas: The Season of Good Will … and Debt?
Don’t get me wrong, I’m not the next Grinch. I love Christmas, and I know how good it feels to really be able to spoil your loved ones. And I know how sometimes it’s easier to just get everything bought and wrapped and done, rather than fret about the budget too much. But when it comes to affluence and creating wealth, that discipline really does make a huge difference.
Over Christmas 2019, the average American who bought Christmas gifts as well as food and decorations for the festive period, spent $928.76. And a previous study by MagnifyMoney showed that 28% of people went into one Christmas period having not yet paid off the debt from the last one.
But it’s no surprise really, is it? Retail companies make themselves a tidy fortune every Christmas. They spend an awful lot of money on advertisements, persuading you that your loved ones need their products wrapped and ready under the tree on Christmas morning. But you may just need to resist. Everyday affluence is about really living within your means, and not overstretching yourself. It’s about not relying on credit cards and accepting debt as a norm.
So unless you’re putting on a Santa costume and playing the big man himself, don’t get into the red at Christmas.
How to Refocus on Modest Living at Christmas
To be honest, I’d be horrified if I knew a relative or friend had bought me a Christmas gift with money they don’t have. Wouldn’t you? I think everyone would. Knowing that the pressure to exchange a gift at Christmas had made someone borrow money really would knock the joy right out of it for me.
So it’s really OK to do whatever you can to reduce your Christmas spending so as not to go into debt over it. And you should resist temptation to overspend, when the money could be more meaningfully used elsewhere. Here are some ways to promote modest living at Christmas amongst your family.
Set yourself a budget
One of the best ways to avoid overspending is to track it. Those who budgeted over Christmas 2019 spent $110 less than Americans who didn’t budget, even if they didn’t fully stick to their targets. Just bringing a bit of awareness to your expenditure, as it does year-round, will help keep your costs down.
Choose Christmas gifts thoughtfully
Don’t be that person running around on Christmas Eve buying presents “just because.” It might be too late now for this year, but putting some thought into personalized presents is going to help you keep costs down too. Think about the gift receiver’s true values, and buy a present that’s in perfect alignment with them.
Revisit your idea of “enough”
As a family, have a think about what “enough” means to you. Do you already have “enough” stuff? Is there actually anything you really need? If there is, suggest really useful presents with a purpose, rather than gifts just for the sake of it.
Gifts don’t have to be brand new
Don’t get sucked in by all the retailers’ advertisements. Why not set the family a challenge of repurposing an old gift, or finding something wonderful in a thrift store or Goodwill? One man’s trash is another’s treasure, after all.
Reuse Christmas decorations – and make some new ones
Set yourself a challenge to buy no new Christmas “bits and pieces” this year. Reduce the annual cost of Christmas by making sure you just reuse what you already have. And give the kids something to focus on by having them make any new ones.
What We Can Learn from Modest Living at Christmas
You may well be going into this holiday season without many money worries, and no real need to do any penny-pinching this Christmas. But is that a reason to go wild with extravagant, luxury gifts and over-indulging? It’s not, and it would be a great demonstration of some unwise money moves.
Bringing a real sense of awareness to your spending throughout the year and not just at Christmas can really help you to save money, or make better use of it. Use a budget, and track your spending. If you’re aware of your monthly income and watch your outgoings to ensure a surplus, the chances are that monthly surplus will start to grow.
Living within your means as well as setting money aside each month for your savings and investments is a vast improvement on living in debt. Remember, compound interest works for you in your savings, but against you with your debts. Dealing with the interest accruing on just one debt could counteract all the hard work your investment account is doing for you.
Being willing to reuse items or buy second-hand can also be a wise financial decision, especially when it comes to big ticket purchases like cars. As we all know, simply driving a new car away from the forecourt sees its value depreciate wildly; making careful decisions over used cars can save you thousands and thousands of dollars over a lifetime of driving. Where might that money be better spent? Dream vacations for the family, maybe? Or in the retirement pot, to bring that retirement forward a year or two?
Realigning Christmas with old fashioned family values rather than overspending on consumer items is good all year round too. How would you rather spend your hard-earned money anyway, or your valuable time? On shared family experiences, or finding ways to earn extra money to cover debts?
Need Some Money Advice?
No matter how much you earn, everyone can use their money wisely. Everyone can make adjustments to their lifestyle to help their money work harder for them. And everyone should have a financial plan to secure their future.
At McClain Lovejoy, we can help you to organize and plan your financial life, from college planning to life insurance to investment strategies, and far more in between. If you’d like to make an appointment to see how we could help you, please get in touch. We’ll be pleased to meet you.