The Holiday Season: A Time to Reflect and Review Financial Goals
As the holiday season approaches, many Americans are looking forward to spending time with friends and family, but it can also be a time of overspending on holiday purchases. According to a NerdWallet poll, about 83% of Americans plan to buy gifts for friends and family this holiday season, with an average estimated cost of $1,014.
Despite this, many individuals are not adequately prepared to manage their holiday spending. A Gallup poll found that 10% of consumers expect to draw from their emergency fund to buy gifts, while 9% will prioritize gifts over household bills such as utilities and debt payments.
Experts warn that people are wired to be consumers, and it is easy to get caught up in the short-term gratification of giving gifts, rather than focusing on long-term financial goals. Add to this the pressure to keep up with social norms and the constant promotions and deals that can create a “buying frenzy,” and it’s no wonder many people overspend during the holiday season.
To avoid overspending, experts recommend developing a spending plan, tracking purchases and actual spend, and considering alternative ways to celebrate the holidays, such as focusing on activities rather than gifts. They also suggest tapping into free rewards, such as cash-back portals and browser extensions, to offset gift costs.
Additionally, taking time to reflect on long-term goals and prioritizing what really matters can help individuals avoid the impulse to overspend. By being mindful of their financial habits and making intentional choices, individuals can enjoy the holiday season while staying within their means.