Every Christmas morning since the time I was a kid, there has been an orange in my stocking. It is a family tradition that stems from the time my grandmother, “Mumsie,” was a young girl celebrating Christmas during the Great Depression. There was one year that her only gift was an orange. My parents, and now my husband and I, have continued this tradition in hopes that we and our children are rooted in an appreciation for simple luxuries and reminded of the positive impact of something that we can so easily take for granted.
The holiday season is rooted in a spirit of giving and celebration. Giving makes us feel good. There is extensive neuroscience research supporting this. Giving allows us to secrete all three key chemicals, dopamine, serotonin, and oxytocin in our brain at once allowing us to boost our mood, happiness and so much more. So why do we often find ourselves more stressed than merry during the holiday season?
Every year, the holiday experience seems to get larger. Some businesses start decorating close to Halloween, Christmas sales begin before the Thanksgiving turkey is carved, and the cost of kids’ gifts can be greater than a reasonable car payment. It is easy to get caught up in the noise around the season or fall into the trap of trying to recreate or (erase) a previous holiday memory.
The season has so much promise for joy, and yet many start the new year exhausted – mentally and financially. Before you get tangled in holiday expectations and habits, take a few moments to find what you want to be centered on for this season.
What does the holiday season mean for you? What are you celebrating? How do you want to celebrate? What brings you joy? What brings you stress? What are your three favorite things about the season? What are your least favorite things about the season? What is most important to you? What is most important to your family? Ask yourself why for each of these questions. The goal is to be present for this holiday season and centered on what matters most to you.
Schedule a 30-60 minute financial review with yourself and your significant other. Review your current spending patterns, cash balances, upcoming expenses, savings year to date, investment balances and cash balances. Assess the last year. Assess the year ahead. Be honest with yourself. What do you have in cash reserves? What do you have saved for the holidays? What can you afford to spend on the holidays for gifts, parties, decorations, holiday cards? Write this number down.
In addition to having a personal financial review at home, schedule a review with your financial planning and tax planning team. In addition to reviewing your thoughts about holiday spending, there are key year end planning actions that should be considered (tax loss harvesting, charitable donations, education contributions, Flexible Spending Account decisions, retirement plan contributions, Restricted Minimum Distributions and 2018 goal planning, etc). Being on top of your finances with your team will help you feel more comfortable and confident with how you approach your holiday spending.
Money can be spent very quickly if you do not have a plan for how you are going to allocate the money you have set aside.
Make a list of everyone you plan on giving gifts to: family, friends, kids’ teachers, colleagues, UPS driver, hair stylist, neighbors, etc. What is the experience you are trying to convey with your gift? Is there anyone that you give a gift out of obligation? Is there anyone whom you might be able to just spend quality time with? Are there individuals that a home-made gift might be a good alternative? Is there anyone you could donate your expertise to as a gift? Consider how you have traditionally given gifts to each of these individuals and determine if it makes sense to change course and dedicate your time and resources in a different manner.
Make a list of everything else you plan on spending money on – parties, decorations, holiday cards, etc.? What is important to you about each of these?
For parties, if hosting, can you make it pot luck? Can you organize a group volunteering event instead? If invited to a party, consider if you really want to go. Part of the stress of the holidays can come from being over-committed. If you intend on going and want to bring a host/hostess gift, consider making a homemade good or donating to a charity in host/hostess’ name.
For decorations, ask yourself if you really need more. If so, consider waiting to buy new decorations until the post-holiday sales. Also consider swapping holiday decorations with a friend or as a family take on the challenge of re-creating some fun ideas off Pinterest using recycled decorations from years past.
For holiday cards, determine what your goal is around sending a holiday card. It may be the way you keep in touch with friends and family. It may be your way of saying hello. It may be nothing more than one additional thing to do on your long task list. Before you invest the time and money consider whether you should be sending them at all. If you do send holiday cards, consider all options; traditional cards (homemade versus purchased), postcards (cheaper postage), ecards and even e-videos.
Stick to the number that you wrote down when reviewing the cash you have available for the holidays. Allocate the cash between all of the areas you plan to spend this holiday season. Set a limit for each category and a limit for each person. If you find what you want to spend on the 2017 holidays is higher than what you have saved you will have to get creative. The good news is there are lots of sales to help holiday spending be manageable and creative ideas to help people feel special. Empower your finances by adding in a line item to your 2018 monthly budget to save for the 2018 holiday season.
Have a conversation with the people you are close with about your plans for gift giving. Set expectations. You might find that with these conversations, the stress you had been carrying about buying gifts was also someone’s else’s stress and that instead of buying each other gifts you instead agree to spend special time together. Setting expectations with your children, both young and adult is a great opportunity to help your own children not get caught up in commercialization of the holiday but rather focus on what is most important to each of you.
Gift giving can take many forms. Consider small acts of kindness to a stranger, personalized gifts to a loved one, volunteering with neighbors, and sharing a glass of wine with a friend. You might also enjoy building a gingerbread house with a child, taking an evening drive to check out the holiday lights and taking a moment for yourself to reflect on the season. They are so many special ways to enjoy the season.
The holidays can be one of the most wonderful times of the year. Keep your finances in check while also keeping the holidays centered on what matters most to you.
Katherine Liola is the Founder and President of Concentric Private Wealth®, a comprehensive wealth management firm with a focus in behavioral advice. Katherine and her husband, David, a global director in the IT cyber security space, live in Willowsford, with their children, Harper (4), Gannon (3), and Emerson (1). Katherine loves spending time with her family whether it be at a local park, a winery, or traveling to some place new. Katherine competes in triathlons and distance running with Team FeXY and finds that training helps her keep up with her children.
Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance products and services offered by Concentric Private Wealth®.
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Advisory services offered through Commonwealth Financial Network®, Registered Investment Advisor.
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