Your Holiday Emergency Preparedness Plan

Lights and Cheer and Credit Card Charges are Coming! Wait, what . . . ?!?

Every year, millions of Americans prepare to celebrate the holidays with their families. From decorating our homes to preparing delicious food, making sure travel plans are solid and that everyone’s gifts are covered, we want to make sure everyone has a happy holiday season.

And then January comes. And perhaps the bill that is associated with all that “cheer” hits like a Mack truck, and maybe the better part of a quarter or even half a year is spent paying off those expenses. That’s a lot of money in interest charges, a lot of money being pulled away from things that are likely more important, like retirement, like the emergency fund, things that we know we need in case something bad happens, because bad things can happen to everyone. For the average American, it takes until March or April of the following year to pay off holiday charges. That’s a quarter of a year gobbled up with holiday spending.

The thing is, the holidays mean different things to different people, be it a time for reflection, for celebration, or looking ahead to a better year, but they all share one quality. The holidays draw out our emotions, and that often includes how we spend and save money during that time of year. Want proof? According to Deloitte’s “Holiday Season” survey, between 2000 and 2017 there was only one year, ONE YEAR where more than half of Americans said they would spend less than previous years during the holidays.

That year was 2009. One year.

I want you to think carefully about about the financial impact the Great Recession had on wages, on the economy, on jobs, on families. Does that statistic make any sense at all? Financially speaking, no, it’s pretty illogical. This galvanizes the point that our spending decisions, many times, are not based on strategy or logic, but based very much on how we feel.

Here’s a little more evidence: According to VisaNet’s Business and Economic Insights, over 9% of holiday purchases happened during between Thanksgiving and Cyber Monday, with 27.1% of spending occurring in the two weeks before Christmas, the heaviest days between 12/22-12/24. In each of these cases, urgency, either caused by the sales being promoted or by the time left before the holiday, caused an emotional reaction and spending reflected that.

That’s why right now, when I meet with clients I am talking with them about what I call their Holiday Preparedness Plan. Akin to an emergency preparedness plan, where you make sure to have non-perishable goods and medical supplies and flashlights and know where to go in the event of a natural disaster, the Holiday Preparedness Plan is made to help make sure my clients know what money is planned to be spent, in what way, on whom during the holiday season. We work together to budget food costs, travel costs, extras that may come up, and make sure that those expenses are addressed so there is no “surprise” come January. It’s not an effort to be stingy, but it is an effort to be intentional about what you spend.  I want you to enjoy the holidays the way you mean to, but not dread the bills in January wondering why you spent so much and worrying about dipping into savings or spending several months paying money back to Visa and American Express.

During this month, either for yourself with your partner, take some time to relax, enjoy a beverage, and spend a half hour drafting your Holiday Preparedness Plan. Make your list of people you’re getting gifts for, set a dollar amount for each, and check it twice. With the average shopper potentially spending upwards of $1,000 this holiday season, having a detailed plan of attack and sticking to it could make a big difference in how much “cheer” you have when the holidays are over and 2019 has begun.