Financial Fitness


Why you may overspend on the holidays and how to stop

Posted at 11:07 AM, Dec 08, 2018

Holiday shopping season has a pesky habit of eating up your extra cash.

Some 51% of all Americans say they “typically overspend” on holiday gifts, according to a 2018 NerdWallet survey, conducted by The Harris Poll.

Here are five reasons you might be overspending during the holidays — and how to fix them.

1. You’re shopping in the store

The first mistake? Setting foot in the store.

“Once you cross that threshold into the store, you’re really on the marketer’s turf there,” says Kelly Goldsmith, an associate professor of marketing at Vanderbilt University.

“You come in wanting to just get a sweater for your mom, and you know exactly what she wants, but they’re going to bombard you with messaging about toys for your kids, or shouldn’t you be in touch with your brother?”

Those persuasive messages can tempt you to buy more than you originally intended.

Tip: If you go to the store, be laser-focused, Goldsmith says. Otherwise, shop online. You’ll avoid the in-store messaging and marketing. Plus, you can compare prices at multiple retailers with the click of a mouse.

2. You don’t know when to stop

Once you start shopping, it’s tough to know when enough is enough. Sure, you already bought your mom a blush pink sweater, but that designer purse in the window would match it perfectly. Maybe you’ll just add one more thing…

“I think part of the reason why we can’t shut our wallets once we start spending on others is spending feels good,” Goldsmith says.

It doesn’t help that a lot of people don’t put a dollar figure on how much they want to spend on each person, she says. And shopping without a budget can lead to overspending.

Tip: Make a list, make a budget and check them twice. “Just like Santa Claus, make a list of names, make a list of presents, make a budget for those presents on that list and then stick to it,” Goldsmith says.

3. You’re focusing on the wrong things

The next culprit? Overemphasizing the material value of the holidays.

Tim Kasser, a professor of psychology at Knox College, has done research on the topic of happiness during the Christmas season.

“We found that the more that people oriented their Christmas season around spending and buying things, actually the lower well-being they experienced at Christmastime,” Kasser says.

Despite this, he says TV, radio and internet advertisements repeat the message that happiness is obtained via shopping and that a good Christmas depends on shopping, a message that consumers hear loud and clear.

Tip: Consider unconventional gifts. Kasser says his family has given nonmonetary presents along with traditional gifts. Think a coupon for your son that says he can skip his veggies at dinner. It’s fun, yet frugal.

4. You’re letting emotion take over

People often overspend because they’re trying to handle some type of emotional issue, like a need for love or affection. That’s according to Dr. April Lane Benson, a psychologist and author of “To Buy or Not to Buy: Why We Overshop and How to Stop.”

“Let’s say you’re buying something for someone else,” Benson says. “You’re hoping that you’ll get the love and affection because you’ve now bought them something.”

“Or, you go into a store because you’re lonely, and there are salespeople there egging you on and making conversation with you, and you start to feel less lonely.”

The result? You buy more than you need.

Tip: Before you make any purchases this holiday season (or anytime, really), Benson recommends stopping and asking yourself a series of questions:

  1. Why am I here?
  2. How do I feel?
  3. Do I need this?
  4. What if I wait?
  5. How will I pay for it?
  6. Where will I put it?

“What that does is create a delay between the impulse and the action,” Benson says. “That moment of delay can get us back into gear.”

5. You’re procrastinating

The final reason your holiday gifts could run up a hefty tab? You’re buying them too late.

“If you’re shopping at the last minute, you’re definitely going to go over budget,” says Diane McCrohan, an associate professor in the College of Business at Johnson & Wales University.

“You don’t have the selection and you don’t have the time that you need. Like if you’re shopping online, you’re not going to have the time, and you’re going to end up spending more on shipping.”

Tip: Shop early and, when possible, avoid the last few days before Christmas. McCrohan says those who wait until Christmas Eve hoping for good deals may actually end up spending more. After all, stores know there will be plenty of last-minute shoppers, so there’s less incentive to put things on sale.

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