Many people may experience a spiked eggnog hangover during the holiday season, but do you also find yourself with a spending hangover? That nagging feeling that you may have spent too much on gifts for your loved ones but you aren’t really sure how much you should have spent?
According to a recent survey by T. Rowe Price, you are not alone. Of the participants surveyed, 64% “spent more over the holidays than [they] should have”. And women are not the only ones doing the holiday shopping. “Men are more likely than women to try to get everything on their kids’ lists (60% vs. 45%).” The holiday spending hangover is increasing as well. Of the participants surveyed, 69% spent the same amount, a little bit more, or a lot more than last year.
So where is this money coming from? Roughly half (55%) used credit cards to buy gifts, but only a quarter of those participants paid the full balance in the first month. The rest are not able to pay off the balance for another 2-12+ months.
How much are we talking about here? The participants spent an average of $422 per child (median = $300).
How to treat this hangover? As with most difficult things in life, awareness is the first step. Until you know how much you are spending, you don’t know if there is a problem. If holiday spending is tracked and accounted for in your annual budget, keep up the good work. If it is not, figuring out how much you can afford to spend would be the next step. We suggest visiting our blog article from last holiday season for tips to keep holiday spending under control. Holiday shopping should be a fun experience for the whole family. It can be a wonderful opportunity to teach children about budgeting and giving, and to spoil your loved ones. But why start the new year with the stress of paying it off?
If you are interested in long-term financial planning, please reach out to Sharkey, Howes & Javer at 303-639-5100 for a complimentary consultation.