The Psychology of Holiday Spending: Understanding Emotional Triggers

As the holiday season approaches, it's easy to get caught up in the festivities and overspend. But have you ever wondered why we tend to spend more during this time of year? From the pressures of tradition and year-end reflection to the temptations of buying for ourselves and justifying overspending, understanding these triggers is the first step toward regaining control of your holiday budget.

The holiday season is upon us, and don’t our bank accounts know it! Unsurprisingly, household spending spikes towards the end of the year as we begin planning Christmas shopping and holiday celebrations. But if we’re not careful, the season of celebrations can bring with it some scary spending.

Why do we spend more around the holidays?

The holiday season is a spendy one for many reasons. First, the more obvious culprits. Time off work, Christmas gifts, holiday parties, school holidays, gatherings with colleagues, family, and friends — all of these things cost more money than your average month, so it helps to be prepared for higher expenditure in November and December.

But on top of that, the end of the year can be an emotional time. We might be confronted by the fact another year has passed, holiday traditions can be loaded with expectations or even stress and anxiety, and we’re just exhausted from the year itself — and that’s all before we’ve even cooked the family meal or organized the kids’ wishlists! All of these factors can create the perfect storm when it comes to our spending.

Emotional spending triggers to watch out for

Becoming aware of the types of spending triggers you might face during the holiday season can help you spot them and stop them in their tracks. 

Being overly generous

If you frequently go over budget when buying gifts for others, it’s worth being extra careful with how you shop for gifts and the emotions that come up when you do. Spending more than you planned on gifts can throw your money management into a tailspin.

One for them, one for me

If you often shop for yourself while you’re shopping for others, you risk doubling your holiday season spending without even realizing it! Finding ways to reduce the temptation to buy for yourself, like only searching for specific items instead of browsing, shopping only with cash, or challenging yourself to stick to your list and rewarding yourself only once you complete it, can help you keep that mindset under control. 

The write-off mindset

When a new year is just around the corner, it’s easy to mentally write off the final weeks of the year and vow to fix everything in January. This can lead to mindless spending and taking your eyes off your budget when it matters most. 

Instead, try to be more intentional with the end of the year. Check in with your budget (even if you loosen the reins a little for the festive season) and recognize when you’re justifying decisions by saying, “I’ll deal with it in January!”

Overwhelm spending

If you’re hosting for the holidays, or you’re a busy parent, or work is hectic in December, the overwhelm of the season can fuel additional spending. Making last-minute decisions, missing out on opportunities to get a better price, and paying up for extra conveniences can all see money leaking out of your account unnecessarily. Instead, try to plan ahead of time to give yourself plenty of breathing room, and delegate tasks to other people in your family so it’s not all on you.

Celebratory justification

If the end of the year is a time of celebration for you, justifying extra spending with the fact you’re celebrating can cost you. It can help to set a fun Christmas budget for yourself that builds in the spending you want to do while still honoring your financial boundaries. Whatever you spend, you’ll always feel better if you’ve planned for it in advance than if you’re left scrambling to organize your finances on January 1.

Momentum spending

The holiday season is full of opportunities to spend, and momentum spending will see you spending more and more money purely based on the fact that you’ve already spent money. Wild, right? This may also be closely tied to the ‘write-off mindset’, because the momentum we’ve built up from spending can prompt us to avoid the consequences until the new year. 

To avoid momentum spending, be strategic about your spending plans and put obstacles in place to intercept your momentum. For example, do all your gift research and/or shopping in one set period rather than sporadically throughout the month, and always define an endpoint to your spending in advance.

End-of-year emotions

A new year can bring up all sorts of emotions that can drive spending, and you might find yourself spending more than usual to make yourself feel better — particularly if you find the holidays difficult due to family dynamics, grief, or loneliness.

Be gentle with yourself if you expect to feel these emotions. They’re valid, and spending money to resolve them makes a lot of sense. To protect your financial best interests, it can help to address these emotions and find other ways to manage them that don’t involve spending.

How to keep tabs on your silly season spending

The best way to limit off-track spending damage is to keep your finger on the pulse. Checking in with your spending every week or every few days in the PocketSmith transaction dashboard, and categorizing them as you go can give you clearer visibility over your costs and a greater sense of control. Plus, you’ll have the data to look back on next year for more accurate cost planning!

Emma Edwards Profile Image

Emma Edwards is a finance copywriter and blogger, on a mission to humanize the financial services industry by creating meaningful content that’s accessible and empowering. You’ll find her penning money tips at her blog, The Broke Generation, sharing financial insights on Instagram, or injecting life into content for her business clients. 

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