20 Dec How to Avoid Over-Spending During the Holidays
This is the time of year when it’s easy to toss our financial goals to the wind. We all want to enjoy the holidays and be generous in our gift-giving to loved ones. However, if we can’t pay for all the new loot, there’s only one person who will visit you in the new year. His name is “Repo-Santa.” In order to avoid this unwelcome visitor, let’s discuss ways to curb our spending now and throughout the New Year. There is no time like the present to be mindful of our spending habits. This is the first step to achieving financial freedom.
Emotional purchases occur when we buy something we can’t afford in our monthly budget, or worse, we go into debt because we’ve fallen in “love” with the thought of acquiring this new object. Unfortunately, our emotions can help us to justify a purchase we never should have made. This is what some people call “retail therapy.” We receive an endorphin high from the thought of a new, shiny item. Emotional spending is especially harmful when making a large purchase of a depreciating item, such as a car or designer clothing. The purchase depletes our savings account, or worse – causes us to go into debt. Eventually, the new shiny item is rusty or worn out and we’re left trying to figure out how to pay for it.
Retailers know firsthand that the human brain works off of impulse. It’s a common practice in big box stores to display small ticket items near the checkout counter. The result is you purchase items you never intended to buy because they’re not considered expensive. In reality, most people go over their monthly budget one small purchase at a time. These small purchases add up over time and may cause quite a bit of damage to your long-term financial plan. If you don’t have a monthly budget already, I have good news for you. I’ve taken the guesswork out of creating a budget worksheet. All you have to do is fill in the blanks and add and subtract. The numbers don’t lie.
As a holiday gift, I’m giving away a FREE Budget Worksheet on my website by clicking the following link: https://faithfulfinance.com/resources/ – free
Living Below Your Means
This is a big one! Friend, we need to strive to live below our means so we can achieve financial freedom. After you have a realistic monthly budget in place, determine how you can cut your expenses, and increase your savings. One example would be to purchase a home with a lower mortgage than the bank says you can afford. Our goal should be to own a home that easily fits within our monthly budget for housing expenses. We want to have money left over at the end of each month. Additional benefits are lower real estate taxes, lower utility costs, and lower home repairs. One right decision like this can help us save more of our discretionary income each month. The more we are able to save systematically over time, the sooner we can achieve financial freedom.
I hope this provides you with some practical tips to avoid overspending and begin your journey to financial freedom. For more tips on budgeting and finances, please tune into Faithful Finance Live on PureFlix streaming on January 1, 2021.