Holiday Finances

As we begin the Holiday Season, it is important to remember the Holidays means many things to many different people.  

For some, the Holidays are a religious holiday with the celebration of Christmas.  For others, it is the beginning of a New Year.  For some, it is time to get together with family.  And for others, it is all of the above.  But for many, it is a very stressful time because of the debt accumulated during the Holiday Season.  At the end of the 2018 Holiday Season, a survey found the average  American had a Holiday debt of over $1,000. Over 50% of those surveyed said it would take three months or longer to pay the debt off.  This means, with interest on the debt, the actual cost would be much higher.  

If you "Google" depression during the Holidays, you will find numerous articles.  I would suggest for some, one of the reasons for emotional difficulty during the Holidays is financial stress.  As a financial planner, I have heard numerous stories from clients and others who felt the Holidays were a financially stressful time of the year.  And as outlined above, for many individuals, the cost of the Holidays last for months afterward.  

Advertisements and the companies that pay for them promote the image the only way to enjoy the Holidays is to buy presents, lots of them.  It is easy to "buy-in" to this concept, resist the temptation to do so.  It is not true. 

For some who have significant discretionary cash flow, the Holidays have no financial stress.  If you are one of those, life is good and be thankful.  For others, the Holidays have great financial stress.  If you are one of those, be honest, first with yourself, then with your spouse or partner if you have one, and finally with family and friends.  People who really care about you will appreciate the honesty of discussing the financial pressure during the Holidays.  

For every family/friend group, I would suggest setting up rules for spending.  Family and friends are able to deal with the financial side of the Holidays in different ways.  Some put limits on spending.  Others have inexpensive gag gifts. Others have no presents and believing the time together is gift enough.  

For me, over the years, I have been on both sides of the financial stress discussion.  In the early years, when our children were young, I could feel the financial pressure during the Holidays.  Later on, when my business had grown, the financial pressure was gone, but I was still very cognizant of the financial pressure of the Holidays put on others.  

What I have learned and would suggest to others is it is very important to not buy into the financial side of the Holidays.  It is fine to buy presents for others within the framework of your finances.  But if you cannot pay cash or if you accumulate debt on your credit cards, you cannot afford the presents.  In any case, presents should not be the focal point over the Holidays.  Make it a spiritual celebration, a time to be with family and friends and finally a time to celebrate the end of one year and look forward to the beginning of a new one.