‘Tis the day after Christmas, and although I’m writing this before Christmas, I’ve been through enough Christmases to know how it feels to look around the chaotic living room and wonder “did I really need to buy All This Stuff?” (times 10 if you have children)
(Note: I can speak only to Christmas, but I’m going to go out on a limb here and guess there are guilt-inducing gift bonanzas in other cultural/religious celebrations. It’s the American way!)
But this isn’t a piece about how you should budget next year. Or how you can sell those unnecessary gifts and get some of your cash back.
Because while you might be suffering a bit of buyer’s remorse or glutton’s guilt right now, the truth is, for many people in tech, the annual Christmas splurge isn’t going to make or break your finances. If you spent too much for Christmas gifts, in the long run, that likely pales in comparison to the effects of other financial decisions.
(Yes, my inner Mr. Money Mustache or Your Money or Your Life fan quails at writing this. To satisfy her, let me just say, “Bad spender! Bad! Now go to your barren room and eat dry crackers until you realize the folly of your ways.”)
Focus on These Decisions Instead
What decisions should you focus on instead?
- Your career. A strong career, with a strong income, is half of the financial security equation. Not to mention the professional, personal, and intellectual satisfaction of career success. Do you have a plan for your career? Are you looking out for opportunities, negotiating higher pay or other benefits, and being intentional about your career choices at every turn?
- Your expenses during the rest of the year. The other half of the equation, is, of course, expenses (and savings, if you want to be picky about it). Don’t let ”lifestyle creep” or “lifestyle inflation” invade your life. That permanently ratchets up your expenses each year, which means that successful career with the higher pay hasn’t actually done much to improve your financial strength.Do you feel bad right now looking at the results of excessive holiday spending? Try carrying that analytical eye with you throughout the rest of the year. How often do you think about how well your spending aligns with your values and goals?
- The two biggest expenses in your world: housing and cars. While you don’t make these decisions very frequently, when the decisions do arise, they can have large, long-lasting financial consequences (for good or ill). According to the financial planner every financial planner wants to be best friends with, Michael Kitces:
“the truth for most households we see is that what makes or breaks the family finances is what they spend on two things: Their house (or apartment), and their car(s). According to the Department of Labor, for the average household those costs for housing and transportation alone are nearly two-thirds of our annual budget, while entertainment is only 5.5 percent, clothing is 3.5 percent, and food is 13 percent.”
“But but! I still want to know how to avoid spending too much again next year!” Okay, okay. As any good financial planner would recommend, and as I’ve recommended in this blog for, well, pretty much every other aspect of your finances: Make a Plan. Some ideas:
- Create a separate “Christmas account” at your bank that you save to throughout the year and spend only the money in that. When the account is empty, stop buying.
- Make a good old fashioned budget. I’m going to spend this much total, and that much on each person.
The key to any plan, though, is that you actually stick to it. That’s the hard part. I know as well as the next person how tempting it is to buy a year’s supply of something I have never used before in my life when I go into CostCo.
That is perhaps the single biggest value a financial planner brings to your life: accountability and discipline to implement and stick to your plans. So, find someone who can provide that accountability and discipline for your gift buying. Maybe a friend who feels the same let down after the holiday.
But for now, I give you permission to enjoy the rest of your holidays without fretting over returning that $50 shirt. Get yourself all plump and/or liquored up over the next week, and then start thinking about financial planning (and even hiring a financial planner) in the new year. Big decisions made in the midst of holiday gluttony won’t be your best.
Question: What financial choice do you regret most from this holiday season? You can leave a comment below.
Do you want someone who can help you focus your time and emotional energy on what really matters to your financial security? Who helps you clarify your financial goals and how best to use your money? Reach out to me at firstname.lastname@example.org or schedule a free 30-minute consultation.
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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner and/or an accountant for advice specific to your situation. Reproduction of this material is prohibited without written permission from Meg Bartelt, and all rights are reserved. Read the full Disclaimer.