How to Avoid Holiday Spending Regrets – MoneySense

This season, choose presence over gifts

The desire to give gifts during the holidays runs deep for many. “The biggest factors driving this desire are our own thoughts and emotions,” says Michelle Johnston, a registered psychologist with Take Care Therapy Co. Family traditions and assumptions about how others will view us based on the gifts we give are also essential motivating factors in determining the opulence of material items or experiences we purchase for others, she added.

Instead, Johnston encourages individuals to “make more conscious and values-aligned choices” this holiday season. Instead of a physical gift, she recommends giving the gift of time: make something handmade, enjoy a budget-friendly holiday getaway, or find another meaningful way to be together.

Holiday debt can take a mental toll

The burden of overspending goes beyond your wallet; it can also affect your mental health.

“When we feel pressure to give extravagant gifts, we may end up engaging in behaviors such as spending beyond our means, increasing credit card debt, or diverting money from other important financial goals like savings and investments,” Johnston said. “This can result in increased stress, guilt, shame or disappointment after the holidays are over and we are forced to face the consequences of our spending behavior.”

Technology has only increased the temptation to spend money. “We walk around every day with luxury items in our pockets (our phones) and they are programmed to constantly remind us of all the different ways we can spend money – so there is always a huge pressure of money hanging around,” says Kathleen Daunt, a financial planner at the New School of Finance. “It’s important to pause and give your brain enough time to really think about the emotional return on investment, rather than rushing into a purchase.”

Roger Wardell, financial advisor at Edward Jones, reminds clients that “a one-size-fits-all approach doesn’t work.” Instead, he advises them to create a personalized plan that supports long-term goals while taking into account short-term priorities, such as holiday expenses. You need to “look into it deeper and decide how much you can spend so that you stay in good shape in the new year,” he added.

Automate savings for stress-free holiday spending

All three experts agree that automated deposits can help prepare for guilt-free spending, whether it’s travel, dining or festive periods.

“Breaking down the total amount we spend into smaller monthly contributions can make saving for the holidays a lot more manageable, rather than spending a large sum of money on gifts all at once,” Johnston said. “If you can set it up so that deposits happen automatically when you get paid, you’re less likely to spend that money because it’s already allocated somewhere else.”

Article continues below advertisement

Additionally, being intentional about gift giving is key to controlling expenses. “If you’re shopping for five people and you don’t want to spend more than $100 per person, your magic number is $500,” says Daunt. “Set up automatic savings each payday at the beginning of the year to ensure that you have the $500 you need for gifts by the end of the year. Even if it’s too late this year, you can set it up for next year and feel good that you have this plan in place for the future.”

Daunt adds that you should delete payment information from online stores on your phone to avoid impulse purchases. Also, pause before each purchase and ask if the joy is worth the price.

Progress, not perfection, is the guide to purposeful spending

Keep in mind that learning how to spend money with intention is an iterative process. “Sometimes, even when we have the best intentions, things can’t go according to plan,” Johnston said. “If you end up spending more than expected, try not to let yourself down. Instead, give yourself some grace and treat it as information or an opportunity to learn your patterns and make different choices next time.”

Daunt echoes this belief, stating that even when the best laid plans fall through, there is always hope. “Even if it’s too late this year, you can get this ready for next year and feel good that you’ve got this plan in place for the future,” she said.

Once the holidays are over, take a look at where new opportunities may lie. “If you can save a little bit in your holiday budget, you can take care of your future self when the new year rolls around by contributing to a tax-free investment account,” says Wardell.

Rewrite your holiday story this year. Give with intention, set spending limits, and start the new year with a sense of control. Your future self will thank you.

Read more about shopping:

About the Canadian Press

The Canadian Press is Canada’s trusted news source and leader in providing real-time stories. We provide Canadians with an authentic, unbiased resource, driven by truth, accuracy and timeliness.