Personal Finance » Spending

Be mindful of holiday spending faux pas

For me, a financial holiday faux pas is when your actions in December have negative financial consequences in the future. Here’s some financial faux pas to think about as you continue your holiday spending.

Stop being overly emotional with your spending

Every decision has two key influences. The logical influence and emotional influence. The challenge when it comes to holiday spending is it tends to be emotionally biased. We tend to justify purchases with common sayings like:

“Christmas only comes once a year.”

“It’s more about giving than receiving.”

“That person has been really good to me, I want to get them something special.”

“I’ll figure out how to pay it off later.”

December tends to be a more expensive month for spending but be careful about getting carried away. These emotional justifications can be a recipe for financial disaster.

Watch out for the credit card hangover

Coincidentally, I was at a social function this weekend and a stranger asked what I do for a living. When I mentioned that I put financial education programs in the workplace, he decided to pour out his financial problems onto my lap hoping that I could magically fix his problems.

In one of his stories, he talked about buying his significant other a big screen TV but in the same sentence that he had no money. He had a friend that worked at Visions that could get him a deal on a 50-inch Big screen TV on sale for only $988. The regular price on the TV was $1229.99 for a savings of$241.99. He said it was the best deal he could find on this TV.

This story is a great example of people who go and look for bargains but then purchasing things on their high-interest credit cards with no plan or ability to pay it off. Let’s look a the numbers:

  • If he makes minimum monthly payments, it will take him about 11 years and 5 months to pay off the TV and the total cost of the TV will be $2,075. That’s not looking like such a great deal anymore.
  • If he pays off the purchase in 2 years, the total cost of the TV is $1223 which is about the regular price.
  • The longer he takes to pay it off, it means he did not really get as good of a deal as he thought.

Related article: 5 ways to pay off your credit cards

Develop a holiday spending budget

Fiscally responsible people tend to plan ahead and therefore be more aware of their financial situation.

Related article: A Disciplined spending plan

We’ve all heard about developing a holiday spending budget but how many people actually do it? According to a study by Interact, two-thirds of Canadians will set a holiday budget for this year. Now the bigger question is how many will stick to their budgets. We live in a world where it’s easier to overspend than ever. How many times have you walked into a grocery store with a list of things to buy and you walked out with MORE?

In this same study by Interact, the overwhelming majority of those people polled said they would go beyond their budgets if they were to find the perfect gift for their spouse or partner (90 percent), child (87 percent), parent (83 percent) or themselves (74 percent).

According to Retire Happy’s very own writer, Sarah Milton, it’s important to take a look at how much you usually spend over past holiday seasons to try and develop a budget for future holiday spending.

Be careful of self-gifting

OK, my guilty conscience has to disclose that I did this already this week. I was looking for some gifts for others when I found a great Columbia winter coat for $99. I tried it on and loved it. I tried on other colors and after 20 minutes bought my new winter coat.

How many times have we done this? We bought ourselves an unexpected gift when we were really supposed to buy gifts for others. According to a survey from Interact, more than one-third (35 percent) of Canadian holiday shoppers will be buying gifts for themselves. Putting the “I” in Christmas can really blow a budget if it’s not planned.

My five cents

Look, this faux pas is pretty common and I’ll be the first to admit I’ve been guilty of all these at one time or another.

No one is perfect but it’s better to be aware of these holiday spending faux pas and try to fight the risk of being overly emotional and impulsive. It’s important to remind us of the importance of fiscal responsibility.

Can you think of any other holiday spending faux pas to share with others?


  1. Kenton Williamsa

    Very good article Jim! I concur with the credit card hangover part. I like many others didn’t realize how much money I was paying towards credit card interest. I had to learn the hard way. Now I pay for everything I purchase by cash/debit. I think once people discipline them self to pay with cash, only then they will think twice of spending their hard earned money.

  2. Evan Thompson

    Jim, I found this article very useful and will share it with others. I agree that it is very easy for many of us to fall into the self-gifting trap, especially when we have others who depend on us year-round and we feel we deserve a little reward at holiday time.
    When that urge sets in, I have two suggestions. 1. Just leave the store (graciously) after telling the sales associate you need to think about it. 2. Congratulate yourself on your resolve and create a budget to treat yourself to that or another item when prices fall further and you have planned your expenditure properly.
    The self-gift will have a more positive impact because you have planned for it and won’t risk regretting what could have been a costly impulse purchase. Happy shopping!

  3. Bet Crooks

    One problem we have is we tend to pay the bill for the entire group when going at for a meal with family or friends during the holidays. While it’s ok once in a while, it sure adds up quickly and it’s not like they need us to pay. We have to remember to be gracious enough to let them pay once in a while. (Yes, they do always ask.)

  4. Nancy

    Let’s not forget the stockings, which once filled with thoughtful things, can far exceed the cost of one expensive gift. I now leave the expensive things in small boxes out of stockings and fill them with treats only.

  5. Denise

    My shopping trick is to first go shopping without a credit card and about $5 in my pocket for a coffee or an ice-cream. I wander around and chose items to be purchased on my next visit. This gives me time to go home and decide how badly I really want to make those purchases. For the ones that pass the “how is it important?” test, I go back and just make those purchases. BTW I love to watch people and the window shopping trip also includes people-watching for my pleasure. Win-win!

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