Why do we spend too much on gifts at Christmas?
The driver for last minute (and excessive) Christmas spending is a combination of our general day-to-day busy lives, an excess of shopping choice (making decision making process harder), credit that is pretty freely available, and an anxiety about making things perfect.
This leads many of us to delay gift choices until the last minute and ‘panic-buy’ to alleviate the anxiety we are feeling. Left with 2 hours until the shops close on Christmas Eve, we do quite complicated mental gymnastics in a noisy and crowded environment. We weigh up the joy or potential disappointment of our loved ones if we get the gift wrong. Then we do a sophisticated analysis about a single gift and whether it is sufficiently personal, high enough quality, excessively expensive or excessively cheap, and then compare it to all the other gifts which will be given and received on the day. That fact that this gift giving is done in a public environment really raises the stakes.
It’s not a surprise that, given those conditions, many of us make the call to buy those extra items because at that moment in time the price seems reasonable when compared against the love and happiness of our families.
Some of the solutions:
- Know what’s important
Have a think about what is important and write it on the top your Christmas list. Remember that no matter how much your loved one may enjoy that present, they don’t want it at the price your financial security. It is a token of our love, not the sum of it.
- Have a plan
Put a strategy in place to moderate your spending such as having a gift plan, only using cash, setting up a Kris Kringle, or agreeing on a gift limit. We’ve put together 10 clever ways to manage your Christmas Gift Spending.
- Know yourself
Know what your weaknesses are, and put in some steps to combat them. For instance, I don’t shop on Christmas Eve. Every year I feel anxiety that I haven’t bought enough, it doesn’t matter how much I spend, that feeling doesn’t go away, so I’m better to spend within my budget before the last-minute shopping rush. Having some sort of event on that day takes away my temptation and distracts me.
- Learn from your mistakes
When the January credit card bill arrives, many of us, despite our best efforts, have spent more than we intended. You are not alone. Make your New Year’s resolution an opportunity to learn from these experiences and give yourself the opportunity to try out some alternative approaches next year. Maybe even jot down some of your thoughts and feelings around your spending, so that you can revisit them before you start the process again next Christmas: this could help you be more objective of your financial choices before you’ve spent money, and enable you to plan more effectively.
- Ask for help
Remember there are people who can help. A financial planner can help you with your budgeting strategies and financial counsellors available for those that are really struggling to manage those debts.