When it comes to spending, the holidays tend to be our most vulnerable time of the year, and companies that want you to buy their goods and services know this. They will employ the most cutting-edge psychological strategies to get you to dig deep into your pockets. One of their favorite strategies is known to insiders as the “Nudge,” which can be used to elicit or facilitate certain behavioral outcomes – positive or negative. Here are a few ways you can implement the Jedi-like power of nudges to protect your personal finances during the holiday spending season:

Plan ahead and create guardrails for your holiday spending

When you are getting ready to expose yourself to the brutal elements of sales strategies, heart-tugging marketing, and product placement, you must stay focused and present. A way to force yourself to do this is to make a plan and establish spending limits based on what you can afford. Here are your next steps:

  1. Establish a spending budget by first reviewing your cash flow and any available discretionary savings. Here’s a resource that can help you get organized. Think through all the other goals you have and any spending that will need to be done in the next 6-12 months. Next, determine what you can afford to spend for the holidays based on those other priorities. Your goal is to avoid dipping into your emergency savings and taking on debt that cannot be paid in full by the due date. Lastly, write this number down and set it aside in a separate account for holiday spending.
  2. Make a list and check it twice (sorry can’t help myself). First, put down what you need. Then start creating a list of what you want. Next, add who you plan on spending on and what you would like to get them.
  3. Now add an estimated cost to each, total them up, and subtract that number from your budget. If the result is positive, you are all set. If it’s negative, you’ll need to decide how you’re going to cut back. Consider first prioritizing your needs and then identifying the highest priority people in your gift-giving group. If needed, consider embracing the Secret Santa option since it’s better to spend $50 on one person than $250 on a family or friend group of five!

Add obstacles to your spending

One of the more genius nudges that companies have employed is removing obstacles to spending. You see it as a convenience. They see it as a huge increase in sales. Here are some steps to take that will help turn those tables in your favor:

  1. Turn off 1-click shopping. Yeah, I said it. The crown king of convenience is one of the reasons that we overspend. Think that you’ll just return the goods you regret and get a credit? Thanks to the law of inertia, the probability of that happening is not in your favor.
  2. Make it harder to spend. The more steps you add, the more time you give yourself to think about the decision and weaken the impulsive response. Consider implementing a 1-day rule or if it’s a cyber deal, a 30-minute rule so that you have time to think before clicking “Buy.” To go a step further, consider having to physically type in your payment details every time you make a purchase. Adding friction to your spending will make it easier to stick to your budget.
  3. Remove the sense of urgency, whether it’s for holiday gift giving or something you need to replace in your home (TV, appliances, etc.). Pricing has grown more variable through Black Friday and into Cyber Monday and beyond. A lot more stores are honoring price matching as well. Remember to stay focused on your holiday budget and priorities. If you aren’t feeling convinced about a deal or don’t really “need” that item then consider putting it on hold and using a price comparison app like one of these to catch a deal when you are ready.

Think of your future self

Taking a moment to think about your future self before you click “submit order” can be a powerful way to keep spending in check. Dan Pink refers to it as the Power of Regret. Try to leverage this thinking for every purchase decision you are about to make by asking yourself the following questions:

  1. Will this decision break my budget?
  2. If it does, how will my future self feel about this?
  3. How will it get in the way of my goals or the future I am trying to create?
  4. How will successfully sticking to my budget help my future self?

You’ve got this

I hope these strategies can help give you the positive nudges you need to avoid falling into the holiday spending trap. This way you can stress less now, have more money for the future and enjoy the present(s). Happy holidays!


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