Why do the holidays make us throw all financial sense out of the window?
Year after year, the emotional charge of Christmas sees many of us spending far more than we should on presents and entertaining. Here’s how to get a grip – and still have fun.
Even if you’re normally sensible about money, this is a time of year when everything pushes you to splash out – from children’s letters to Santa to adverts full of laden tables and salivating dinner guests. “There is a huge cultural pressure to spend during the festive period,” says Peter Tutton, head of policy at the debt charity StepChange. Last January, nearly 60,000 people contacted the organisation for debt advice.
Still, you don’t have to throw your hands up and surrender. Here are a few ways to push back.
1. Work out your emotional relationship with spending
Understanding your personal relationship to money and spending is the first step in recognising when you’re likely to lose control, and research from the University of Surrey suggests that practising mindfulness can help you to fathom why you feel the need to buy. If you know Christmas is likely to push you into the red, it may help to think about who your financial role models were when you were growing up, and how they approached Christmas. Can you spot any negative patterns that you have adopted? When are you most likely to shop, and is it a vulnerable time? (I realised, to my surprise, that pre-8am on Saturdays is the time when I’m most likely to buy expensive things online).
2. Think about the after-effects, too
Research by Ryan Howell and colleagues at San Francisco State University found that compulsive spenders are more likely to believe their purchases can change their life, through transforming their appearance or boosting their self-confidence. But think back to the last few things you’ve bought; have any of them made a significant difference to your health and wellbeing? Have you been made magically more attractive?
3. Be careful who you shop with
The people around us can have an effect on how much we spend. “Some of us get into the cycle of going shopping every weekend with the same people, and there’s an element of egging each other on,” says Prof Karen Pine of the University of Hertfordshire, who has conducted extensive research into our emotional spending patterns. It’s easy to fall into the trap of competitive shopping, with friends, or partners: “Oh, well, if she’s getting one of those, it means I should get one of these.” But, as your mum might say, just because she’s spending a hundred quid on an ironic reindeer jumper, do you need to do it too?
4. Get your kicks elsewhere
We may get a hit from the “buy high” when we spend money, but because of a phenomenon known as hedonic adaptation, or the hedonic treadmill, our happiness levels quickly revert back to normal. And next time we have to spend even more money to get the same hit. You can lessen the effect of hedonic adaptation, though, if you vary your experiences. So instead of shopping, do something else that gives you a reward, such as seeing friends or going to the gym.
5. Shake up your habits
A lot of our spending patterns are habitual – we’ll buy the same things, from the same places, over and over. If you always buy with your card, you could experiment with only paying in cash for a couple of weeks and seeing how much you save. Pine is the co-founder of a company called DSD (Do Something Different), which creates programmes that help to encourage “behavioural flexibility”, and make you less likely to spend without thinking. (The courses cost £25, but if you’re in financial difficulty then they will consider waiving the fee.)
6. Spend on experiences to get your money’s worth
Of course, the biggest financial burden at Christmas is gifts for other people. You can talk to friends and family about cutting down on gifts, but unless you’re feeling really Scrooge-like, you’ll still want to buy a few things. Ryan Howell and his colleagues at San Francisco State University found that spending on experiences, rather than things, gave greater satisfaction. Even better, look for things you might be able to do together so you get a sneaky reward out of it too. “We have always told the children that Santa buys one present and we buy the rest so they know that we pay for the presents they get,” says Cass Bailey, who writes about money saving at frugalfamily.co.uk. “This year, instead of lots of stocking fillers, I’ll be giving them experiences which I’ve got great deals on using sites like Groupon. Things like an afternoon Segway experience doesn’t cost much more than a stocking filler that will hardly be played with – and the memories will last much longer.”