We are counting down to the holidays and as we enter the month of November, we are going to take some time to talk about areas pertaining to gift giving, spending and other various areas surrounding this topic.
Today, however, we are specifically talking about not digging that hole of debt with your holiday spending!
According to Investopedia, nearly every year since 2009, American consumer spending on holiday gifts and other holiday expenses has increased over the previous year.
For 2020, Americans, on average, were expected to spend $998 on gifts, holiday items, and other expenses during the holiday season, down $50 from 2019. We now see that the COVID-19 pandemic is projected to result in decreased spending on travel and increased spending on family and friends in 2020 and now in 2021 a bit of a change based on the increased cost of goods and experiences.
U.S. consumers will spend up to 9% more this holiday period compared to 2020, when consumers spent a total of $1.2 trillion during the key shopping period between November and the end of the year, according to a forecast from Deloitte.
Knowing this information, have you budgeted for this and planned for these expenses?
If you are like most people, you haven’t.
Credit cards are one of the most expensive ways to borrow money with credit rates standing at around 17.4%. As credit card balances creep higher and Americans’ confidence in their ability to pay their bills declines, adding on even more high-interest becomes detrimental in being able to achieve the true financial security we may desire to have.
We are spending more money than we have. There is always a reason and behavior behind that we must get to. Recognizing and creating health behaviors with our wealth will make more of an impact than trying to prescribe a solution without knowing the REAL problem.
And we must ask ourselves … WHY?
What is the reason we are spending more than we have?
Why are we choosing to put ourselves in debt to buy more then we can afford to?
I always want to address the behavioral component and what our relationship is with money. If you haven’t read the blog post or listened to our episode on financial behaviors, I invite you to do so after you listen to this. >> Learn what YOUR Emotional Financial Behavior
At Forethought Planning we know that money touches every aspect of our lives. So, when we think about holiday spending and credit card debt, ask yourself…
How much debt are you using and not paying back?
How likely are you able to pay back the debt?
Now for another angle this I want you to consider this …
When you buy products, you are driving up sales for retail partners, but if you don’t have the money you are in getting yourself in debt.
And guess what?
Your purchases actually drive that company to have an increase in their stock prices. That in turn allows their stockholders (essentially) to create more value – wealth through those increased prices. Of course none for that is guaranteed and each individual stockholder has their own personal financial situation.
So, consider this…are we driving wealth up in one space while accumulating debt in another?
This holiday season, stop and think and dig a bit deeper before you buy.
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What is it I really need to get?
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Is there something I can give them that doesn’t really spend money?
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What is driving YOU to spend more money?
And remember, there is nothing you can buy that can make up for time that is lost. Think about your priorities and what really matters to you and those around you.
Resources:
2021 Credit Card Debt Statistics
Holiday spending expected to rise this year despite Delta variant
Average Cost of American Holiday Spending
Holiday debt could take years to pay off
We hope you continue to join us on this series and invite you to schedule an appointment to our complimentary 30 min Wealth Assessment session to learn more about how we incorporate these strategies and other’s to assist you through the financial planning process.
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