How to Spend Money During the Holidays, with Joy and Without Fear and Guilt

8 min read
December 05, 2017

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Are you excited and stressed out about all the shopping you have to do in the next month? Spending Money and Buying Stuff is pretty much the air we breathe from now until 2018 starts.

I have two young kids. And if you know any young kids, you know that life is a pretty steady stream of “I want that!” From cheap plastic tchotchkes to candy to canopy beds costing hundreds of dollars.

My children are, of course, not alone in this behavior. It turns out that I want stuff all the time, too. A new zip-up fleece jacket, bar mitts for my bike (oh my goodness, aren’t these amazing?), a new sautee pan… Yes, it’s true. I live a glamorous life.

This all gets turned up to 11 during the winter holidays. So, how we do we spend money during the holidays (for gifts, travel, food), without feeling financially guilty or hurting our financial strength?

This is not a piece about coupons or how to hit the big sales or whether to get a store credit card. This is a piece about spending money in a way that brings you the most joy not only during the holiday season, but throughout the year. And to give you some techniques for doing so.

Building Consciousness Around Your Spending Is Important…and Awesome.

When my husband and I both worked in the tech industry, we didn’t pay much attention to how we spent money. If we wanted it, we bought it. Our nice paychecks meant that we could do that while still saving adequately. We didn’t have to develop the habit of prioritizing and making conscious choices about what we spent our money on, so we didn’t.

Sound familiar?

I regret that lack of attention now. In part because I could have saved more. But also because we eventually learned that that kind of attention (and intention) can bring real joy.

Two-ish years ago, my husband quit his job and I launched my own financial planning firm. We went from A Good Income to No Income overnight. Needless to say, we started paying a lot more attention to our spending, real quick like.

And you know what? The experience has been wonderful. Almost everything we buy now is something we Really Want. We get less stuff, and the stuff we get we really appreciate. We are spending way less than we were three years ago, we don’t feel deprived, and I feel so much more empowered and in control of my money.

Holiday time (Christmas, for us) is a real test of our approach to spending. Especially because we have those two pesky children. Below, I’m going to tell you how we approach holiday spending. Maybe this isn’t your exact process. But I hope you find some way of bringing more consciousness into your shopping and spending. It can only improve things.

Step #1. Set a Dollar Limit for Spending.

It’s really really (really) important to set a specific dollar limit. Retailers are really really (really) good at convincing you to buy their stuff. I mean, the survival of their companies depend on you buying their stuff.

If you want to get a sense of what we’re all up against when it comes to advertising, I recommend the book Can’t Buy My Love. It was published way back in 2000, and I’m pretty sure the discussions of Jordache Jeans have lost much of their punch, but its lessons about the power of advertising remain oh-so-relevant. By one modern measure, we see between 4000 and 10,000 advertising impressions each day. Without regular, conscious thought and planning, we ain’t got no chance against the genius and deep pockets and ubiquity of Big Advertising.

If you don’t set a strict upper limit, dollars to doughnuts you will spend more than you want to or should.


A recipe for impressing the hell out of your friends (and yourself):

  1. Decide at the beginning of the year how much you’re going to spend during the end-of-year holidays.
  2. Set up a separate “Holidays” bank account.
  3. Save to it incrementally from each paycheck throughout the year.

If you wait until holiday time to figure out how much you want to spend on the holidays, there are going to be all sorts of external pressures to spend more. But think about how easy it’d be in January, when you’re not all amped up for the holidays, to think rationally and responsibly about spending during the next holiday season?  

Go ahead…envision yourself on January 2 of this coming year (or maybe January 4 if you’re planning to get Extremely Drunk for New Year’s), making this decision. I, at least, can practically feel how unemotional I’d be around making a decision about an event 11 months in the future.

This is akin to the famous “nudge,” from Nobel-prize-winning Behavioral Economist Richard Thaler, that gets people to save more, not by reducing their spending today (which is painful), but by committing to save future raises (which, thanks to our lizard brains, is a lot easier to do).

Then when holiday time is finally upon you, you’ll have a dedicated “For Holidays! Spend Me!” bank account. Think about how much less painful it’ll be to spend that money, instead of taking it out of general savings, or racking up credit card debt?

Because I’m publishing this blog post in late November, and not early January, however, I’m going to go with the assumption that you’re just starting to plan your holiday spending now. (Maybe bookmark this post to revisit in January?). Your first step? Set a specific dollar limit.


Holidays are a financial goal just like many other important things: travel, saving for retirement, saving for a down payment, paying for your kids’ private school, and so on.

So, let’s approach it the same way we approach saving for any kind of goal: Rank your goals in terms of importance to you and decide on savings accordingly.

Of course, we always start with the same boring sh*t: retirement and an emergency fund. Just suck it up, folks…no awesome Christmas present is worth being stuck in a job you hate or having to rack up credit card debt to pay an unexpected healthcare bill.

But after that very short list, we come to the negotiables: Holiday spending vs. house down payment vs. vacations vs. financial freedom vs. <fill in your goal here>.

You need to make sure that you’re saving enough for goal #1, then go to goal #2, then on to goal #3, and so on. You basically want to “back into” your holiday spending based on how much you need to save for other goals in your life.

Here’s an example that is more or less representative of a lot of my clients:

  1. Your total income is $150,000.
  2. After taxes, you have $120,000.
  3. Your regular monthly expenses are $5000, $60,000 annually. Now you have $60,000 left over.
  4. You want to save 20% for financial independence because you want to achieve it well before age 65. That’s $30,000 of savings. Now you have $30,000 left over.
  5. Travelling is important to you, so you spend $8k every year on that. Now you have $22,000 left over.
  6. You want to buy a house in a few years, so you’re saving $20,000/year for a downpayment. Now you have $2000 left over.

Which means your upper limit on holiday spending should be $2000. Or maybe your number ends up at $500. Whatever it is, you have an upper limit, and you’ve made sure that you’re not sacrificing more-important goals.

Step #2. Keep a List of Stuff You Want to Buy.

I keep a list of stuff I want, and a list of stuff I want to buy for my husband, my kids, and my family in general. I get a lot of benefits from building and reviewing such lists, benefits that I think everyone could share.

  • Lists build anticipation of finally getting the gifts. In the book Happy Money, the authors talk about how anticipation is a large part of the joy you get from spending money. It can provide more joy than the actual item or experience itself. So, if you keep a list over the course of months of stuff or experiences you’re going to buy—either for yourself or others—now you get to look forward to enjoying it when finally you do buy it.
  • Lists give me time to think about buying/spending decisions. This follows the same logic as the “put purchases in your shopping cart for 72 hours before buying it” tactic. 

    I put items on my own “I want” list throughout the year. Invariably I notice that, by the time Christmas comes around, many of them have been supplanted in importance by other items. It’s surprising how few “I want”s survive a months-long waiting process…and the ones that do, I’m much more likely to appreciate for a long time!

    So, with time and thought, I actually end up spending my money better, getting more me-specific value for my money.
  • Lists turn the eventual gifts into a treat. If I buy stuff for myself (or my kids) all the time, gifts become an unremarkable, everyday experience. If I buy stuff infrequently, I turn gifts into a treat. Treats bring joy. 

    Think back to your childhood: how often did you get gifts? If you’re like me, it was not that often. Birthday, Christmas, maybe a couple other times during the year. Now, if you have any kids in your life: how often do they get new stuff? If my children are any indication, the answer is “All the freaking time.” I want my children to truly appreciate getting gifts…so I try (“try” being an important word) to save gifts for the rare special occasions.

Step #3. Prioritize that list.

My gift list is long by the time Christmas comes along. Prioritizing it benefits me in two ways:

  • I can stay within my spending limit, because I know which items I can not buy without sacrificing much enjoyment.
  • I am more likely to get the Most Awesome out of every Christmas dollar I spend.

Additionally, studies show that giving a small gift detracts from a bigger gift you’ve also given (paywall). So, it strikes me that culling your list to give fewer, but on average better, bigger gifts will make your recipient happier.

When I prioritize my list, it becomes very obvious to me which things are more on the Passing Fancy end of the spectrum, and which things are more on the Must Have end. I love that feeling.

I really hate it when I spend money on something that, disappointingly soon, isn’t that useful or enjoyable to me after all. I hate that sense of wasted money. Prioritizing and only buying the top priorities limits that disappointment, limits that sense of waste.

Spend Your Time and Energy as Meaningfully as Your Money.

During the holiday shopping season, I am not interested searching for the biggest sales, combing through coupons, and getting up at 5 am to get the stores first. If that’s your jam, go for it. I avoid it, in part, simply because it fills me with dread.

But I also avoid it because I believe we have a limited amount of energy, time, and mental space for dealing with our finances. I’d much rather we spend those precious resources figuring out our values, what we really want, and how we can most effectively support them.

How are you going to make sure your holiday spending brings you joy, without the aftertaste of anxiety or shame?

This article originally appeared on Flow Financial Planning


About the Author

Meg Bartelt, CFP®, MS, is the President of Flow Financial Planning, LLC, a fee-only virtual firm that provides financial guidance to women in tech. Previously, she spent over a decade in the software industry.

Do you know XYPN advisors provide virtual services? They can work with clients in any state! View Meg's profile