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By Suzean Haumann *
The festive season is here, which can be as stressful as it is joyous. A lot of the stress comes from the extra expenses at this time of year: from local or overseas holidays and flashy gifts for the whole family to non-stop entertaining, December and January are expensive!
And if you have spare or saved cash to do so, then I say go for it. It’s been a long year and we all need to unwind a little.
What worries me is when we fall into the trap of spending like mad, even if we can’t afford it. Reaching for your credit card or other forms of debt to pay for short-term festivities is a habit that you need to break as quickly as possible.
But rather than lecturing on how to spend your money this December, I think there are important lessons we can take from behaviours at this time of year and apply them to our long-term financial plans. Or vice versa, because at the end of the day, saving for your retirement is about a life-long discipline that feeds into short-term events like the festive season.
Holiday spending and financial management
I like to think of the journey to retirement as a lifelong marathon that ends with you achieving your financial dreams. The festive season, however, can be more like a series of hurdles that test your ability every year to stay on course.
My argument is that if you can resist the temptation to make unplanned purchases in December, then that’s a discipline you can apply to your longer-term planning. Think of it as training to stay ‘financially fit’.
I believe that if you overspend during the holidays, then you might be more tempted to neglect your savings or take on unnecessary debt.
Every impulsive buy not only affects your current budget but can also set the tone for future financial decisions. This pattern can create a cycle where you repeatedly enjoy short-term pleasures instead of prioritising long-term stability, making it harder to achieve your financial goals.
Balancing the enjoyment of the holidays with financial discipline is totally doable. Here are some simple strategies to help you celebrate without messing up your financial future:
1. Recognise the pressure
Know that feeling the urge to spend during the holidays is normal. Realising that many people face the same temptation can help you stay calm and make smarter choices. Just like managing your money all year, being aware of spending temptations during the holidays is key.
2. Set clear financial priorities
Before the holidays arrive, remind yourself about your long-term financial goals. Whether it’s saving for a home, paying off debt, or investing for retirement, having clear priorities can guide how you spend during the festivities. Doing this same exercise for your long-term goals will help you stay focused throughout the year.
3. Create a realistic budget
Decide how much you can comfortably spend on gifts, travel, food, and entertainment. A clear budget helps you stay on track and avoid impulse buys that can mess up your finances. Just like budgeting is important for your overall financial health, it can also help you hold back on overspending during the holidays.
4. Prioritise meaningful experiences over expensive items
Instead of focusing only on pricey gifts, think about experiences that create lasting memories. A handmade gift, a family outing, or a special dinner can be more meaningful and less expensive than extravagant presents. This focus on quality rather than quantity is also a healthy approach to apply to your long-term financial habits.
5. Plan your gift buying ahead of time
Avoid the last-minute rush by planning your shopping early. Look for sales, compare prices, and set aside specific times for buying gifts. Planning ahead not only saves money but also reduces stress during the busy holiday period. You can do the same with your personal finances by planning ahead so that you make informed decisions and avoid unnecessary expenses.
6. Limit the gift recipients
It’s easy to feel you need to buy gifts for everyone, but this can quickly drain your finances. Focus on those who matter most to you and ensure your gifts are meaningful without breaking the bank. It helps this when looking at your long-term finances to make sure you don’t overextend yourself with debt and other obligations.
7. Don’t use credit for holiday expenses
Using credit cards to pay for holiday spending can lead to high-interest debt that lasts well into the new year. Instead, use cash or debit cards to keep your spending in check and avoid unnecessary debt. A similar reluctance to take on high-interest debt in your long-term finances will help you stay in control of your finances.
The most important take-away for me from looking at how your festive season habits influence your long-term finances is that this is not difficult. It just demands discipline and commitment. And if you do manage to rain in your spending impulses, then that’s probably the best gift you can give yourself.
I’m hoping that even if you don’t have a debt-free holiday season this year, that you will at least try to achieve that in 2025 and beyond. Until then, here’s wishing you and your family a safe and blessed holiday season, and that you commit to giving yourself the best gift you can: a financially secure future.
* Suzean Haumann as a Certified Financial Planner® professional and head of Brenthurst Wealth TygerValley.
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