There is a lot going on this time of year, particularly in a year like the one we have had. But this could also be a good time to start thinking more seriously about managing our finances and why not start with holiday spending?

For some of us the holiday season can be a time when we feel we can allow ourselves to indulge by overspending on gifts and other things rather than think about managing our finances. But we all know that feeling when we must deal with the credit card bills in January because of that overspending- and that’s something we can do without!

Below are some tips and ideas for how you can manage your holiday spending so you can avoid those January blues.

Make a List for Your Gift Shopping

If you have ever gone grocery shopping when you were hungry, you know how easy it is to end up with a cartload of snacks and a large grocery bill.

The same sort of thing can happen when you go gift shopping without a proper list. You can easily be tempted to buy anything you see on sale and end up spending much more than you planned to.

It’s a good idea to start by putting together a list for the gifts you plan to shop. A bit of upfront planning and research on the cost of the gifts you plan to buy, would give you a more accurate idea of what those gifts will really end up costing you, and if it looks like you are stretching your budget, you would have time to rearrange your list.

This way, even if you come across sales, instead of spending money blindly, you would be able to take advantage of the sale if it includes an item that is already on your list.

Don’t Buy on Impulse

We know this has been an unusual year for everyone, and that includes businesses. With all the uncertainty around the Pandemic situation, many retailers started their traditional holiday sales earlier and in some cases with flashier sales.

Most of these sales are time sensitive and that is by design. They are designed to put pressure on us to buy before the deal disappears forever. While being able to buy what you need on sale is a good thing, the real result of these sales is that we end up buying on impulse, and usually buy things we don’t really need and would not have bought if there were no sale.

A helpful habit could be to walk away from the computer whenever you feel an impulse to purchase and to take a break. Sometimes, by taking a break and letting the impulse subside, we may realize we don’t really need to make that purchase.

If you come back to the computer and feel you still want to make that purchase, then that’s OK. It’s likely to be something you would really enjoy and appreciate.

Spending Driven by Emotions

This is like impulse spending. Especially in a year like this one, when we have all been under a lot of pressure. Buying gifts and other items can be a form of escapism from reality and give us a temporary good feeling and a break from the harsh realities out there.

However, that satisfaction will be short lived, and the consequences of overspending will leave us with an unpleasant feeling that would wipe away any satisfaction from the original purchase. By being aware of the role emotions play in our purchasing decisions, it would be easier to recognize those situations and avoid them.

It could be helpful to ask a few questions before making a purchase. Questions such as:

•  Is this something I really need?

•  Is this purchase driven by my emotions right now?

•  Would I feel happy about this purchase next week?

•  Is this purchase a treat for myself?

Once again, it can be a good habit to take a pause before making the purchase decision, to ensure our decision is not being driven by emotions.

Budgeting

It is common and quite easy to overspend during the holidays. However, if you notice you are overspending on a regular basis, this could be a sign that you need to create a new budget.

Sometimes it can be helpful to simplify our budgets and include fewer line items, which make it easier to track. The problem with budgets that are too detailed and contain line items for many smaller categories of spending is that they can be very time consuming to track and can end up overwhelming us.

It can be much easier to track our spending if we operate with fewer categories by including smaller line items into larger buckets. This will in turn make it easier to stick to our budget and can keep us motivated to continue using a budget.

Treating ourselves

When things are tough, it can be very tempting to treat ourselves by spending. It can give us temporary satisfaction to spend now rather than save for later even though deep inside we know that this will stop us from reaching our financial goals.

To overcome this is not easy and like most things in life it takes practice. But the first step is awareness and to realize that the spending choices we make now will have a direct impact on our financial security in the future. It is also important to not be too harsh on ourselves if we succumb to spending temptations occasionally. Otherwise, we can lose motivation and throw in the towel.

It can be helpful to start observing our own behaviour, which will help us identify what is pulling us into spending situations. Once we have determined the triggering factors, it can be easier to adjust our behaviour to avoid those trigger factors. A helpful tool could be to set a reasonable and attainable financial goal such as creating an emergency fund. That way, each time we are in a spending situation we can ask ourselves if it’s not a better choice to put that money towards the emergency fund.

Try following some of the tips above and hopefully come January you will feel a sense of satisfaction over how you managed your finances during the holidays, instead of dreading to see those credit card bills.