Let’s talk about Christmas because I don’t know if this or not, but this year Christmas is in December.
I say that kind of tongue in cheek.
Obviously, I know that’s in December, but here’s what most people do. Most people let the months go by, and they kind of know it’s there, but it’s not there. And then suddenly right around Thanksgiving, people wake up to the reality.
That Christmas, no kidding now is just a few weeks away,
So, a lot of stores start putting Christmas stuff in and some of them have it in like September and you’re like, Christmas is so far away.
Why do they have that stuff here already? And then Halloween comes and goes and then around Thanksgiving, it’s like, wait a minute, tomorrow’s black Friday.
That means Christmas is kind of soon. And so, then suddenly, they kind of go into freak out mode. And they start trying to figure out what they’re going to do.
That is what we’re trying to do here.
So, the question is, who’s ready for Christmas?
Generally, when it comes to Christmas, there are kind of three ways people handle it.
Number one, people, and I have some clients that do this. And my mom did this when I was young which is basically have like something like a Christmas. Account.
They put so much money in every month, every paycheck. They transfer it over and then normally right around November 1st. They have all the money. So, they kind of plan for it and, they have it and they just kind of go execute it.
That’s the ideal way to go about it. That’s something that must be done with a Christmas club account per se. Or it could be your own sinking fund account. That’s number one.
The number two-way people handle Christmas is they, and this is how Erica and I do it, is normally around September, we start allocating so much of our cashflow from September, October, November, and December and allocate so much money towards Christmas.
And then we go ahead and spend that money. Normally around November and December. That’s how we’ve done it.
And then there’s a third group of people who really don’t save anything and either mad dash it and just kind of cash flow it in December or what most people do is go into debt.
Most people end up going to debt and they pay for Christmas not from September to December but from January till May.
Average Spending Amounts
But how does the average American go about Christmas?
Well, according to statistica.com, the average American spends about just under $900 on gifts.
According to last year’s National Retail Federation of Information, the average American spent just under $1,000 in total on Christmas. So that would include things beyond gifts, decorations, trees, things like that.
On average, people spend about $230 on non-gift holiday items- food, decorations, some travel stuff like that. This is always a statistic that kills me is how much people spend on non-gift purchases for others. AKA things that they bought for themselves: $118.
You’re in their shopping and you’re thinking about buying stuff for somebody and you’re like, Okay, yeah, that’s on sale and that’s kind of cute and that would look good. And I don’t know that they’re going to get that for me. So, I’ll just get that for, for myself.
All that’s, that’s the one that kills me, but it happens (A lot)!
So, the idea of what we’re trying to do here is to have some sort of plan. Financial planning is all about the idea of having a plan. we have our month-to-month money management spending plan. But we also could have big event or big projects plan.
So, I’m going to lay out in this case for Christmas, but you could use this same methodology for saving up for weddings. house remodels, big projects that you have going on.
As I alluded to in a couple episodes before, you live in the most marketed to society in the world. And this season that you’re getting ready to go into, it’s the mega shopping, spending season of them all.
More companies make more money, this quarter, then they do the other three quarters together. That’s why they say it’s black Friday, is because it’s the day that the retailers go from being in the red, meaning a negative, a loss on the P and L into the black, meaning they made money.
All I don’t know if that’s really the case or not, but that’s kind of the, the legend behind the black Friday thing.
Here’s what normally happens for most people, companies spend all year planning for this time of year where they have all the commercials, all the marketing, all the music, all the sounds, all the staff, everybody’s geared up to try to get you to spend money.
And so, they have a plan. They have a marketing plan. They have an operations plan. They have a production plan. They have an HR plan. They have, they’ve been planning all year for these two months. November and December.
And then here comes average Joe and Jane consumer just ditty bopping into these stores with no plan, no forethought, no idea of what’s going to happen, and they go into spending frenzy.
It’s like there’s blood in the water and we’re just going crazy. And they overspend. They either go into debt or they spend all their money more than they wanted to. And the reality is they won because they had a plan and we didn’t, and so what we must do is we have to have a plan for Christmas.
Do why retailers put the stuff in the stores in September and it gets earlier and earlier every year? It’s because of first dollars.
In everybody’s mind, some people have it on paper, very few. I’m going to teach you how to do that today, hopefully. But most people have this kind of mental calculator that they’re doing, and they say, oh, I’ll buy this, and I’ll buy this.
And then they kind of get to this point like, ah, I kind of spent enough on Christmas without really knowing how much they really spend at all. But they just kind of like, I don’t know if I really want to get any more. And so, I’ll just wait till after Christmas and maybe get the deals. So, what those retailers are doing?
They know that everybody has that mental calculator in their head and they’re trying to get the first dollars. Because if they position themselves to get dollar one thousand two hundred there might not be that might not be spent So they want to get the first dollars because you’re like Oh Christmas’ stuff is here and I need this decoration I want that version. This would be a great gift.
They’re trying to get those first dollars They’re all fighting over the first dollars because if they know they can get it first They don’t need to get worried about getting it last because the last man out ever tries to go Christmas shopping on Christmas Eve and a lot of the stuff’s gone right because You wait too long, it’s gone.
So, the retailers are trying to get first dollar. So, let’s go about creating a Christmas spending plan or dare I say budget. And again, the same methodology here can be used. For any other kind of big projects that you might endeavor to take on.
So, three steps.
Step number one
Estimate, guess, forecast, how much do you want to spend on Christmas.
This big notional thing: the holiday season, whatever you want to refer to it as, it’s not just Christmas day. It’s really kind of the whole, end of year season, if you will.
There’re about five categories where you’re going to spend money, one, the majority, like I mentioned earlier, is gifts.
The second is decor, decorations., inside, outside, lights, trees, stockings, things that blow up in the yard, all kinds of various stuff like that. Decorations is number two.
Travel. Some people travel for the holidays, either airline, Train gas, for the car, things like at hotels, lodging, eating on the way, things like that.
Number four category is food normally for, potentially Christmas day. Maybe you do a Christmas Eve thing. Maybe you have a work, end of year work party, church parties, potlucks, et cetera, et cetera. So, there’s food associated with those types of things.
And then there’s a fifth category, which is just a miscellaneous catch all that, doesn’t fit into those four categories.
Which sometimes there is some things, but not normally this go into those four, but there’s a fifth one there All right So number one estimate how much you want to spend on Christmas if you’ve been one of those Christmas Club persons how much you have right if you’re a save up for it so much September, October, November, December, , much you’re going to have.
If you haven’t done those things now would be a good time to say, again, you have that mental calculator that, that, that barometer in your head off, how much you want to spend, but let’s be intentional and get it out of your head and on paper where you can see it. Step number one.
Step number two
Step number two is then to lay out the details of what you’re going to spend and details matter.
So, for example, for gifts for the gifts list, the people that you want to buy for kids. Mom, dad, aunts, uncles, cousins, coworkers, pastor, favorite financial advisor, he should probably be on the list. I’m just saying, and so list all those people out that you want on there and then write down some gift ideas.
Maybe a sweater, maybe a watch, maybe a new iPad, different ideas, gift cards, dollar amounts of just cash you want to give, whatever it is, lay out some ideas of what you want to give. And then you can put next to that where you might get them, so if you’re going to get, clothing, put the clothing store.
If you’re going to get a tech thing, put best buy or, wherever you’re going to get from apple.com or, Amazon or wherever it might be. And so you’re, building out a plan and then write down the price that you want to spend, for that person, for that item. And you start to lay it out and you do this for all your known expenses.
So do it for all the gifts.
Do it for all the decor and the decoration stuff. We need a new tree this year or I want to get some different outside lights or I want to, yeah, every year we get new ornaments and we paint them or whatever your thing is, kind of lay out all those things and how much you might want, think they are and, then do that for travel, how much for gas and lodging and so much for food and , what are we going to take to this and what are we going to take to that?
And you’re laying out papers and what you’re doing is you’re getting out of your head and you’re looking at it, and then you can kind of use that as a threshold against, you add all that up. Okay, we said we’re going to spend $1,000. We have $1,500 of things written down.
One of two things must happen.
Either the number of things must go down or the top number must go up, it’s a relatively simple equation. But that’s how it works. Because if you’re comfortable with spending $1,500 in this example, that’s fine.
If you say, nope, I only have a thousand, but you need to get rid of some things.
That’s okay too.
So, you go through that iterative process to try to get the details listed of what you want to buy, when you want to buy it, who you’re going to buy it for, et cetera. Then what you do is as you go about creating the list.
Step number three
And as you execute the list, you write down what you spent.
So, let’s say, you had a sweater for dad, and so dad sweater, you’re getting it at wherever. I don’t know where I’m not cool. So, I don’t know, JC pennies. I have no idea where you didn’t buy sweaters from? And so, then you say, oh, I think it’s going to be 40, but it really costs 35. So now you can have 5.
You can reapply to somebody else, or you get dad something else for 5. How are you going to go about doing it? But your kind of having this tracking mechanism that goes along with it. And so, it’s, it’s going to be iterative in nature and you could readjust what you’re spending. Maybe the sweater you thought was 40, but it was really 45.
So that 45 went up, which means somebody else’s must go down or we must go back to our original number and up it by 5, but you’re doing it intentionally. You’re doing it on purpose, and so why would you want to do that?
Why do this
Number one is, you’ll be more thoughtful, you’ll be more cognitive, you’ll be more in control.
You won’t overspend, you can sit down and talk about it with your spouse. Like Erica and I, we did this a couple of weeks ago and so we sat down kind of for the end of the year for us, we listed out what we’re trying to do. And there you go. We have it all on paper now. We don’t have all the gifts, right now, but as we’re thinking of things, it’s in our mind now, as we think of things, we can jot it down or have a conversation about it.
And so., the plan is in works and then you can also get it. If you see it on sale, what you’re going to get and it’s on sale. You can get it then you can get ahead of time to plan for shipping because as, shipping takes a little while. So, there you go.
And of course, to help you out. I have a spreadsheet that you can utilize. So, if you go to truewealth.show to the resources page there, you’ll see a Christmas spending plan.
You can download that. It’s in two forms, Excel or in PDF if you want to just print out and write it in and do the math yourself. Otherwise, the Excel does the. Math for you.
And so, you can use this same approach again for any kind of big project, a wedding, a childbirth, a house renovation, some sort of big project that you’re going to endeavor on.
Mircro Action
Your micro action for the week. Formulate a Christmas Spending Plan. You have about 40+ days before Christmas gets here. Most people do their spending after Thanksgiving.
So, you have about two weeks to begin the process of formulating a plan. It will make the experience more joyful, less stressful more in control. You won’t just be aimlessly meandering around the stores and driving all over the place.
You’ll know what you want to get, where you want to get it. And it will change. The giving season because really that’s what this is all about, the whole meaning of Christmas is that God so loved the world that he gave his only begotten son, Christ was born as a gift to mankind and so that’s what it’s all about.
It’s about the giving. People like to give, most people are givers, but the giving can become stressful and aggravating and frustrating. This will help eliminate some of the emotion and stresses of it.
So, I hope this helps you on your financial journey and until next time, I hope you have a great day.
