Written by: Sophie Hau, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
In many cultures, the holiday season can be pretty festive, but it can also be wallet-insensitive. The pressure to go out, drink, and shop for gifts can be overwhelming.
Did you know that 1 in 4 people feel financially burdened by the holidays? And 1 in 4 people in the USA wish the holidays were canceled this year due to financial stress. If you’re feeling a little tense, guess what? You're not alone. In this article, I will share three alternative ways of spending and a tip to gain financial clarity: the art of buying experiences, understanding love languages in gift-giving, being upfront about your financial situation, and planning ahead for your future expenses. Learn how to enjoy your holiday season without jeopardising your financial wellness and without being a party pooper!
Buying experiences vs. stuff
It's all about experiences over possessions. Let's rethink the way we gift. In today’s era, people are becoming less obsessed with accumulating material possessions compared to our parents’ generations. In fact, 72% of millennials claim that they would rather spend on experiences over material things, as compared to past generations. This generation cares a little more about the carbon footprint and the impact of consumerism. So, before you spend your entire paycheck running around town buying things, think about what experiences you can buy to enjoy together. How about booking a night for the whole family for a cozy getaway weekend next spring? It's a great way to create lasting memories without adding any clutter to your lives. On top of that, there is growing academic research about the correlation between money and happiness. I want to point out two fun facts. The first one is after a certain income threshold, happiness changes are more about how we spend our money than how much we make. The second one is spending on experiences brings more happiness than buying materialistic things. Creating memories together will bring you long-term happiness.
Purchasing according to one’s love language
Next on the agenda, the love language twist. If you are unfamiliar with the concept of love languages, I highly encourage you to look it up. It was introduced by Dr. Gary Chapman in his book "The Five Love Languages." According to Chapman, each person has a primary love language, which is how they most naturally express and receive love. There are five of them: words of affirmation, acts of service, receiving gifts, quality time, and physical touch. Understanding your own love language, as well as the love languages of those close to you, can lead to more fulfilling and effective communication in relationships. Usually, each individual has a primary love language, but can also appreciate expressions of love in other languages. Surprisingly, receiving gifts is actually the least popular love language overall, according to studies. So, instead of going on a shopping spree for everyone, buy a gift for your materialistic cousin, and be creative with your other family members. Pour your emotions into a heartfelt letter, or simply spend quality time with your parents. You will be surprised how people appreciate these gestures more than physical gifts.
Paying with honesty
The holidays are supposed to be all about love, not loans. Remember that honesty is the best policy. If the cash flow isn't flowing at the moment, be honest with your friends and family. There's nothing worse than a family member putting themselves in debt for the sake of others. No one wants you to get into debt over a gift. Communicate openly, explore alternatives, and hey, consider a potluck or a board game night. Let’s recall that one in four people feel financially burdened by the holidays. Chances are that you aren’t the only one feeling this way in your surroundings. It's essential to remember that the holidays' true spirit lies in our relationships and connections with our loved ones. By shifting the focus away from expensive gifts and embracing alternative ways to connect and show appreciation, you can create a more meaningful and fulfilling holiday experience for yourself and your loved ones. Ultimately, It's all about the company, not the price tag.
Anticipating expenses (sinking funds)
If you’re feeling financially stressed about the holidays, it might be because you haven't (financially) planned well enough for this December. No need to panic; it's never too late. Start now, it will help you kickstart your financial planning for the new year. The number one reason people experience debt, financial issues, or financial stress is that they don’t forecast sinking funds! What is it? A sinking fund is extra money you save each month for future spending. In other words, save now for later. Future spending for what? Good question: saving today for all those planned future expenses. Because today, you already know what you'll be paying for at some point next year. To clarify, I’m not referring to your savings account (remember, your savings account is for wealth building and retirement) nor your emergency fund (strictly for unexpected expenses, like a car repair or job loss). You can’t think of any? Let me share with you the most common ones: any electronics you need to replace in your household, all the vacation and summer weddings you're already dreaming of, any change of season clothing you will need, the annual routine car checkup, all the family and friend birthday gifts, and parties and, last but not least, the end-of-year holiday season including gift shopping and additional dinners.
That sinking fund IS your financial safety net, keeping you debt-free, on budget, and on track for those big financial goals.
How do you calculate your sinking funds? It isn't rocket science. Figure out what each fund needs, divide by the months till the expense and add those numbers to your monthly financial planning. Voila! You got yourself your planned sinking funds.
So from next month on, you already know how much you need to save every month till next year's holiday season.
These simple moves allow you to enjoy a meaningful and joyful holiday season without compromising your financial wellness.
Build your money mindset and enjoy a joyful and financially stress-free holiday season!
(Free template) You can download the whole Conscious Cash Flow Planning template including the sinking funds calculations here to help you get started.
Sophie Hau, Executive Contributor Brainz Magazine
Sophie Hau is a Certified Money Coach (CMC)® who helps overspenders develop a healthy money mindset to create a wealthy life.
With over 15 years of experience working in non-profit, corporate, and entrepreneurship spanning 3 continents, her diverse career has led her to create a company bridging personal finances, coaching, and psychology: Moneysophy. In Ancient Greek, sophy (sophia) means "wisdom" and "technical skill." The mission is simple: popularising the tandem mindset + tools for true wealth.
