As December approaches, the consumerist holiday advertising has begun in earnest. I was shocked recently to see an advertisement from a local credit union on the bus stop at Union and Cooper. A couple was pictured on the beach with the tagline, “Loans — Live the Life You Want.” It’s not even subtle anymore!
Here are some ideas to make the inevitable holiday materialism more meaningful and less of a financial burden:
Gifts That Keep On Giving
Take a moment to inventory your personal belongings. What things have you owned the longest, and why? What are some things you use every day? What are some things you would replace if they wore out or lost? What do you still own from your teenage years or even your childhood?
The vast majority of things we own are used rarely and eventually discarded. The overlap in the Venn diagram between gifts that are desired and gifts that are enduring might be small (especially for kids), but it’s worth thinking earnestly about what gifts might meet both criteria.
Shopping Cart Tricks
The idea of “retail therapy” is based on real, basic human emotions — buying things you want can feel good. The desire to strive and acquire and stockpile may be natural, but fulfillment from it is fleeting. If you can extend the cycle by delaying gratification and waiting to buy things as long as possible, you’ll experience the same amount of yearning over time but spend a lot less money.
One technique to restrain reflexive purchasing is to institute a personal holding period requirement for purchases; let the item sit in the online shopping cart or on your shopping list for a certain period before buying it. You may be surprised at how many things drop off the list without ever being purchased.
To adapt this method for the holidays, try holding off on purchases for yourself and ask for them as presents. This will keep you looking forward to the next big thing and give your friends and family an idea for a gift you actually care about.
Avoid Credit Cards
Credit card issuers have achieved one of the greatest marketing accomplishments of all time with this concept: “I use credit cards for everything — for the points — but I pay it off every month, so I win.”
First of all, given the profitability of the credit card industry, many people are not actually paying it off every month. But even if you do, credit cards still fuel overspending.
A famous study from 2001 examined the price consumers were willing to pay for desirable sports tickets. One group was told the winner would return after the auction was completed and pay with a credit card, and the other group had to come back with cash.
The credit card group bid approximately double for the tickets, despite many of them almost certainly being “pay it off every month” people. Even if you love your rewards, consider switching to debit cards and cash for a month or two for a reset — you might be surprised how your spending changes. The simple step of having to consider a cash balance in a checking account rather than a sky-high credit card limit that will never be reached can be just enough to interrupt the buying reflex.
The advertising industry is extremely good at tying together the concepts of happiness and spending, especially this time of year. These tips can be one small step toward breaking that link, to free up more time, money, and space to focus on things that really matter this holiday season.
Gene Gard is Chief Investment Officer at Telarray, a Memphis-based wealth management firm that helps families navigate investment, tax, estate, and retirement decisions. Ask him your question at
ggard@telarrayadvisors.com or sign up for the next free online seminar on the Events tab at telarrayadvisors.com.
