EMOTION, that’s what causes people to buy things. Studies show that the majority of purchases that we make are based on emotion. The car that makes us feel good, the house we live in, but during this season of “giving” that also goes for Christmas. In order to keep your spending under control and within a budget this year, we need to get a grasp on our emotions. The momentary flash of happiness on the faces of loved ones while they unwrap their Christmas presents from you may turn into a yearlong struggle of paying back credit card debt if you are not careful.
Holiday spending may rise to as much as $586 billion this year, that’s up 4.1 percent from last year, according to the National Retail Federation, the retail industry’s trade group. And a number of holiday surveys, including one from the NRF, show a growing number of consumers feeling cautious, but at the same time, they are also more upbeat about the economy.
Those optimistic feelings could lead to more confidence at the cash register, at a time when income growth has been stagnant. In the most recent report on personal spending and income in September there were signs that consumers were cutting back on saving in order to fuel their consumption. During the holidays, the risk rises that shoppers will turn to credit to fill in the gap.
The best plan is to come up with a dollar amount and stay within that fiscal amount. Some use a total number to spend on giving while others use a number and divide it among all the recipients. If you are using “credit” (which I recommend not doing) set a reasonable goal to pay off the holiday debt within two billing cycles. This way you’re not dealing with increased debt come June or July. Remember, shopping now is fun, and giving is also fun, but you may need that extra money for an unexpected emergency later in the year. Some people are going back to the old days when they would make gifts that show more time and love. Fact is that the buying is easy, it’s the time and love invested in a unique gift that lasts forever.
Happy Holidays and here’s to rational shopping.