Give thought to how you give this holiday season

Noreen D. BeamanNoreen D. Beaman, Chief Executive Officer

The holidays represent a time when many Americans express love and affection with gifts. Gift giving serves many purposes in our society. It helps define relationships, express feelings, show appreciation, smooth a disagreement, share good fortune, and strengthen bonds. While the joy of giving is undeniable, excessive spending could put your financial goals in jeopardy and ultimately stand in the way of happiness.

The American Research Group projects that the average person will spend $929 on gifts this holiday season. To put this amount in perspective, consider the following:

  • Last year, the average consumer spent $882, so this year consumers believe they will spend on average $47 more than last.
  • The last time consumers spending exceeded $900 was in 2006.
  • We’ve had a somewhat steady climb in spending since 2009 when the average person spent $417.
  • Gift spending peaked in 2001 when the average person spent $1,052 on holiday gifts.

live-simplyAs with any benchmark, the amount of money “the average person” spends on holiday gifts should bear little relevance on your spending. Whether you spend more or less than this projection is a personal choice that is best made with intention and with your own financial situation and goals in mind. These common holiday spending triggers, however, could get in the way of mindfulness and prompt you to spend more than intended.

Keeping up with others. If you try to match the amounts spent by colleagues, friends, family or peers, you could find yourself spending beyond your means and putting your financial goals in jeopardy.

Trying to be fair. A common cause of spend creep happens to create a sense of balance or fairness. When you overspend on one relative, you may be inclined to create equalization by matching the dollar value of gifts for others.

Just getting it done.  For some, holiday shopping is just another task in an already long list of things to accomplish by the end of the calendar year. It’s easy to overspend if you haven’t committed to a spending budget, decided who to buy for and what to get, and taken the time to seek out the best deals.

Autopilot. Sometimes we gift without considering whether the expenditure aligns with current realities. As families evolve, a discussion about how each member would like to celebrate the holidays may be worthwhile. For example, as your extended family grows, it may make sense to discuss a kids-only gift policy, put monetary limits on spending, or do a gift swap.

Self-purchases. Nearly sixty percent of holiday shoppers (58%) will buy for themselves and will spend on average of $139.61 doing so. This year’s projected self-spending is up 4% from 2015 and is at the second-highest level in National Retail Federation survey’s 13-year history.

The holidays only come once a year. Many people enter the holiday season as they would a free zone. They buy until they get to the end of their ever-growing list of recipients. They decorate until every square inch reflects the feeling of festivity in their heart. Unfortunately, many people do so without regard to the implications on short and mid-range financial goals and thus experience feelings of regret.

The act of gift giving has tremendous intrinsic and extrinsic value. A growing body of research suggests that the most important way in which money makes us happy is when we give it away. Gift giving at the expense of long-term financial goals, however, will bring anything but happiness.

Temptations beset all sides of the path to your financial dreams. During the holidays, temptations may take an altruistic form but still involve spending for today’s pleasures and forgetting about the Future You. This holiday season, give thought to how you give because the Future You is depending on your ability to be mindful, spot (over)spending triggers, and positively influence your ability to endure.

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor

Sex Ratio In Economics

If you want men to open their wallets, make them think there aren’t a lot of women around.

The University of Minnesota recently released a study showing that when potential mates are scarce men will behave more aggressively with their money.

Researchers had participants read articles that described the local population as male-dominated.  Then, participants decided how much money they would save, and how much they would borrow using credit cards for immediate spending.

The savings rate plummeted 42% for men who believed women to be scarce.  These same men indicated that they would borrow 84% more money each month than their counterparts who did not perceive gender inequities.

In a related study, participants examined photos with varying gender ratios.  Some assortments had more men than women, others had more women than men, and a third group had a balanced sex ratio.  Participants then choose between receiving $20 immediately or $30 in a month.

Pictures with just a few women prompted the men to opt for the fast cash rather than wait a month for a higher return.

Women’s financial decisions do not appear to be impacted by sex ratios.  Their expectations, however, change.  In a predominantly male environment, both men and women expected men would need to spend more on mating efforts.

Researchers also calculated the sex ratios and evaluated debt levels of more than 120 U.S. cities.  Predominantly male communities had more credit cards and higher debt levels than those with balanced sex ratios.

For example, in Columbus, Ga., there are 1.18 single men for every single woman.   Consumer debt averaged $3,479 higher in Columbus than in Macon, Ga., where there were 0.78 single men for every woman.  Macon is less than 100 miles from Columbus.

Could the reverse be true?

If men perceive potential mates to be plentiful, would they save more and take on less debt?  Could the fact that women live longer than men subconsciously suggest to men that spending levels can taper off in later years because they may live in predominantly female retirement communities?

Source: January 2012 University of Minnesota’s Carlson School of Management Study, “How do humans compete for access to mates? What you find across cultures is that men often do it through money, through status and through products.”