Money Smart Gifting During the Holidays

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Hey, there. Are you one of those that absolutely love the holidays, but then you end up with a holiday hangover when the credit card bills come in? Well, welcome to this episode of the affluent entrepreneur show. In this episode, we're going to talk about how do you do gifting during the holidays without breaking the bank? All right, so I look forward to seeing you in this episode. Cheers.

This is the affluent entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money, and scale your life while creating a deeper impact and living with complete freedom, because that's what it really means to be an athlete entrepreneur.

Hey, there. Welcome to this episode of the affluent entrepreneur show. And this one's a special one because it's a special time of year, and let's face it, the holidays are a special time of the year. Now, they can be challenging for some folks, but by and large, the spirit, the energy, the happiness, the graciousness in our world goes up. The appreciation goes up. We get a chance to reflect on the year, to look back on the year. And one of the things that we get to do is to show that gratitude. We give gifts. Obviously, whether it's Christmas or Hanukkah or any other holiday, during that time we get gifts, we get a chance to see people and get together, and all those things start to come into play. And, you know, like, I've grown up with, with some friends that literally the holiday season is like the big thing of the year. And literally the amount of gifting and the amount of stuff under the tree and all of that would take a truck to get through. In fact, there's one in particular that I'm thinking about that the reality is they actually take a. A food Break in the middle of opening gifts, and then they come back. That's how many gifts there are now. And there is no. I don't want anyone to sit back and go, oh, gosh, Mel's going to be a bah humbug here. No, no, no, no, I'm not. I just want you to understand.

And do it with intent. Remember, I'm the. I'm as much as I'm the money guy. I'm not the one that's going to tell you not to do something in most cases. I just want you to be conscious, I want you to be aware, and I want you to be intentional. Here's some things, you know, what I don't want you to do is go through this holiday season, do a lot of gifting, put it on credit cards, and then all of a sudden regret it on the other side of it, you know, and, and so this is the thing that I think we need to just think through. How do we gift smartly without breaking the bank, without putting us in a situation? So, you know, I was looking up some statistics, and I think that it's. It's really interesting to look back on what happened in the prior years. And there was a study done by moneygeek.com and some of the stats were interesting. On average, on average, the Americans spent around a little over eleven hundred dollars in holiday shopping. Okay. Which to some might be a lot. To some, it might not be much. In fact, there's. What was it, 13% actually spent more than $3,000. And so there can be a fair amount of spending. But here's some other interesting stats around that, is that 25%, 25% actually regretted spending that much. 25% regretted spending that much. And then 65% was put on credit cards, yet 41% put over 90% of their holiday spending on credit cards. Okay, so almost 50%, 41% put all. Almost all their. Their holiday spending on credit cards. And by mid February, by mid February, over 40% still hadn't paid off the. The credit cards. Now, I only say this because I think it's something that we need to be clear on, we need to be.

Smart about as we start to move into this season, this holiday season and beyond. Because let's face it, we're in a time where we've watched prices go up because of inflation. We've watched the Feds raise interest rates. And as I record this, the Feds are meeting again next week. They're probably raising interest rates again next week. And they anticipate that they'll raise them again before the end of the year. And what does that mean for you? That means that anything with a variable interest rate on it is going to get more expensive, I. E. Your credit cards. So if we're carrying balances on credit cards now and we're going to put on more stuff for holiday spending and carry those balances into the coming year, then it's going to get more expensive to pay off. And at some point it may get so expensive because the interest rate and the charges on it go up so high that it becomes problematic and really difficult to pay off. And so I just want us to be smart about it as we move forward. In no way do I want you to interpret this episode as bah humbug and Mel saying not to spend on the Hollies. I want to be smart about it. So we'll talk about some of the things that I do during the holidays. And I want to give you 12 things that I think that you can do to make sure that your spending is most optimal, to make sure that you get the most out of it and that you're doing the right things as you move forward and that you keep yourself safe. The last thing I want anyone to do is to find themselves in a situation where you get into February, March, April, and you're still carrying balances from the holidays. And now you're sitting back saying, oh my gosh, I've got crazy times. Now I'll give you an for instance, because December, this, this last quarter of the year and the first quarter of the next year is always the most expensive, at least in our household. But also it can be for a lot of folks, especially in California. And here's why.

One.

During this time, you all should be doing tax planning. So during, during this season you're looking at doing tax planning, which means that you may have to pay estimated taxes, you might have to make your contributions to your retirement accounts. I'm actually going to do a whole episode on year end tax moves that you need to do. But so you have that tax planning that's going on right during this time because it has to get done before December 31, otherwise it becomes a challenge. Then the other thing that happens is that real estate taxes in California are due in December. They're actually due in November, but they're late in December. So you've got real estate taxes due during the same holiday season that comes through. Now you move to the beginning of next year, the beginning of next year, you start to roll into other Holidays like Valentine's Day. Now in my case, I have my wife's birthday and Valentine's Day both in February. But then you roll into the second payment for real estate taxes is due to in April. So you've got real estate taxes again due. And April 15th is when our taxes are due. So if there's unpaid taxes, those gotta get paid also whether you do an extension or not. So this next season, this next six month season can be a costly season if we're not careful about it.

So that's the spirit in which I want this to kind of come across. I want to walk you through 12 things that you could use, you could do to start to understand and control the spending or control the impact it has on your wealth creation and do it in a way that makes sense. So let's do this. I'm going to jump to the iPad, we'll write some of these things out for you. But the first piece of this is, this is that number one.

Literally get clear and on who you need to shop for.

Too often, if we don't have a clear clarity on who we shop for, we just keep adding to the list. And so before you ever do any shopping, before you go out to the stores, before you go online, before you do anything, make a list. Make a list and look at it from the perspective of which relationships actually matter most and rank them. So you've got the top ones at the top, those are the ones that are priority and we need to take care of them first. So want to get clear on the who. So I make a list of who is going to be on that list to make that happen. And one of the things that I actually do is I start to categorize.

Them in priority. Okay. Because the level of priority, the level of spending will shift. I mean, I look at what my list is going to have. My wife, obviously it's going to have my brother, my, you know, my sister, it's going to have my son, my granddaughter, all of these people. And they're, they got to be at the top of the list. I want to make sure that I take care of my family and those that are really close to me first and, and, and move from there. And so that's number one, is to get clear on who. And when you get clear on who, you set the priority of the who because of the relationship and the depth of that relationship to make that, make sure that that happens. Now the other side of this is that number two, and these aren't in any particular order, but number Two is I want you, I want you to always, always do price searches in the sense of. One of the things that, that, that you'll see is that you're going to get bombarded with ads, you know, on social media, on Instagram, on Pinterest. And all you're going to get bombarded on ads. And the risk is that you just swipe and buy.

Take a moment, take a moment and look at what it is you're thinking of buying and saying, one, is it for the right person on the list and is it on the list? And two, to search that out and see if there's a better price for the same thing in there. The other thing to consider is always do a search for promo codes, okay? I always do a search for promo codes.

You know, everything from whether you're using FedEx or a store or something, you can do a search for promo codes that you can put in to get a 10% discount, a 20% discount or $10 off and everything. So it takes two seconds to just bounce out of the shopping cart, do a search for promo codes and then work from there. Okay? So that's number two. Number three. Number three. If you're going to get tech, if you're going to get tech, and I know that, that a lot of people, they want the state of the arts, okay? But you might want to take a look at last year's models.

Okay? Because here's the thing. If it wasn't really an upgrade, it was an enhancement, do we really need this year's models? And we may be able to save tremendously on a model that's a year old. If it's simply just an enhancement, it's not something that is dramatically different. So I would look at last year's models in the tech space and say, does it make sense to be totally frank, there's times that a number of my computers, I have a lot of Apple products and a lot of my Apple computers, I actually get them through the refurb, you know, otherwise you're paying for some, you know, some premiums for brand new stuff that I'm probably not going to get the benefit of because I don't need it. And so as much as it may not be, oh my gosh, the newest best that just came out, it's what I need. And why not, you know, why not take a discount and do it that way? So when you're looking at technology, I'd invite you to just look at last year's models and see if that might work. Now this One I know is probably tough for people, but it's really important. We really need to set a budget. We need to get real. Look.

We may be heading into a recession. I don't know. You know, if we look at the technical measures, we are in a recession because GDP growth has declined. But whether we are or aren't, we have seen some earnings that have come out and people are giving guidance on a slower economy in 2023. Well, slower economy means what? Cutting costs. Cutting costs means possibly marketing budget, but also.

Labor. So there may be some job losses coming. And depending on whether you are following kind of our wealth priority ladder and some of the things that we teach around creating liquidity and building wealth and having that solid, unshakable financial foundation, then you need to be aware of the fact that if something were to happen to your income streams, can you sustain yourself? And so one of the ways to do that is to put a plan in place to set a budget, to put a spending plan in place based upon the who, the relationships that matter and what you want to do with them. And so fact of the matter is that if all you can spend is a thousand bucks, then you spend a thousand bucks. If it's 500, you figure out how to use 500. If it's 5,000, it is what it is. But going without a spending plan and a plan on how it's going to get paid back, the credit cards get paid off, and those kinds of things is a step in the wrong direction. It's. It's a step that's going to get you into financial trouble down the road. So here's the thing to think about.

The holidays.

There's a, a lot of ways to show generosity, caring, compassion, giving, contribution.

And it doesn't have to come at the end of a dollar bill.

It, it can come from effort. It can come from you.

Dedicating some time, you doing something nice. It can come from creating gifts. In fact, this leads to another. One of the things that you can do is what about doing something nice like crafts or cooking? Now, this won't be me. Just so we're clear, okay, you don't want me doing any crafts, and you certainly don't want me doing any cooking. But think about it this way, is that if you are great at cooking, like my wife is phenomenal at cooking and baking and doing that, and she makes these little gift boxes for people in the neighborhood and all that stuff. And, and so it's not only thoughtful, but it was a labor of love that she did and Went out of the way and created. What about doing that? Well, I remember us doing this with the kids at the karate school, where they created toys and they created little gifts and crafts and for kids that weren't as fortunate. And we went and gave them these gifts, and the kids, because they were made with their hands, it just meant so much more. It wasn't like they all just buy that and buy that. They created something in the process. Okay, number six. Number six. All right, I know this may rub someone the wrong way, but what the heck? Black Friday.

Maybe a red zone. What do I mean? Listen, Black Friday, Cyber Monday, all those things, their marketing speak, they have expanded them, and in fact, they're doing Black Friday sales before Black Friday. And the reality is that a lot of times it's just an excuse to do what they call a sale. But I've looked at some of these things, and the reality is that sometimes they're not as good a deal as you think, because what ends up happening is they advertise it, and then they go, well, we're out. Because they only had one or two or three at that price point. But what they've done is they've pulled you in. And it's an indirect. You know, this sounds bad, but it's an indirect bait and switch because we're out of those. But we have these. Okay? So all I'm saying is this. Don't get caught in the emotional pull of Black Friday sales. I mean, we have watched on tv, you've all seen it, where people are fighting in the stores, people are trampling people in the stores. My God, how is that the holiday spirit? All right? And so before you get caught up in that emotional pull of that, the lists, the budget, the who, the categories, and now, you know, specifically what you're looking for. And if there happens to be a Black Friday Cyber Monday sale that works for what you're trying to get, great. Because often what ends up happening is you get caught in these things and you start buying stuff just because it looks like it's a good deal. You don't need it. You don't have a plan for it. It isn't a gift that you were thinking of getting, and you end up buying stuff that you didn't really need. All right? So be careful about the whole hype around Black Friday, Cyber Monday. But go in with an intent saying, if I want to get a TV or if I want to get a computer or if I want to get this, that's what I'm looking for. I'm not just going in and going. I'm just browsing and whatever's on sale, I'm going to buy. That is where we start to get ourselves in trouble. Now, mind you, I've done that before. I've spent the nights in front of, in front of Circuit City in. Yeah, Circuit City. Going back a ways. Okay. I've spent the nights in, in front of, you know, these stores to get the sales. And most of it I'm like going, why did I do this? Why did I do this? So beware of the Black Friday sales.

Then sometimes you know you're going to do an expensive gift. Now this is something that you may be late on this year, but moving forward, if you're going to do an expensive gift, why don't you set up a sinking fund? In other words.

What we want to make sure happens is that if you know that you have a gift that you want to give that's abnormally high or more expensive, and let's say that that gift is $1,200 because it's going to make the math easy. And I know that I got to buy that in December. Then what I should be doing is creating a sinking fund and putting a hundred dollars away a month. So by the time I need to buy it in a year, I've got $1,200 put away. So this is why I say maybe a little late by the time this airs to be thinking that way. But in the future, what I want you to do is start to look at and say, if there are expensive gifts that I want to get and it doesn't matter, it's not just for the holidays. It could be for someone's birthday, it could be for your anniversary, it could be for a graduation. Use sinking funds as a vehicle to put money aside so you're not putting it on a credit card with an interest rate that's going to absolutely hammer you. And so what I would do is use a sinking fund at a high yield cash account for expensive gifts. You're putting money in there, you're going to make a little bit of interest. Right now you can get up to 3% interest on some of those high yield cash accounts. And you're just allocating the money. And when it comes time to buy the expensive gift, you actually have cash to do it. We're not going to put it on a credit card and end up running up credit card bills with 18, 20, 25% interest rates on them that we might not be able to pay off for a number of Months. Months. Okay, so that's number seven. Number eight.

Number eight.

Be careful. Be careful of the shopping spree. Here's what I mean by this. You're going to the malls, you're going to the stores, you're going in there. And what ends up happening is we go on this shopping, we get. Now I do this. I do this primarily with clothes. I'm not. I'm one of those that I don't really like shopping necessarily. I don't really like clothes shopping. But if I'm in the mood and you're the salesperson, it's your lucky day because I'll buy a bunch of stuff in a day and then I won't buy for months. So I go on a spree. The problem with that is the tendency is to overspend. I'm in the mood. Yeah, okay. Throw that in and throw that in. And so I want you to be careful of the spree. The way you counteract that is the list. You know who you're, you're shopping for, what you intend to get, you know what you want to spend and why you're getting it. So instead of getting caught in a shopping spree where you're buying stuff and you get home and go, well, let's see what I got. You actually went with intent, with purpose. You knew exactly what you were trying to get, and you worked from the list and you didn't get caught into that. Okay, number nine. Number nine, avoid, buy now, pay later. Schemes. Yes, I used the word schemes because that's what they are.

Marketers know. Marketers know that if they can take the friction out of your buying decision, you will buy more. And the way that they do that is to work you on the payment side and not the cost side. So you might be looking at it and saying, it's a thousand dollars to buy this. But they go, but here's the deal. We got zero percent interest, and in fact, we're going to postpone your payments for three months. So no payments for 90 days. 0% interest for 180 days. So you can actually walk out with this today and not have to pay a dime. And then when you start paying on it, you just pay these payments now, it sounds great until all of those pay laters come due. And now all of a sudden you, oh, my gosh, this is a lot bigger than I thought. And now you have a problem getting out of it. And so we need to be able to buy as much as we possibly can at the speed of cash.

Not credit and not Pay laters. Because if you're not careful, you aren't doing the math between all the pay laters and when that happens and they all come due, they become really, really difficult to fund and to get them paid off. So I would avoid those when we're doing it now. That leads me to number 10. Number 10 again. This may not be early enough for you this year, but you can use it next year. Get ahead of the game. Here's the thing. This is important. This is something that I do when Stephanie and I happen to be out. I am listening, I'm watching. I see things that she likes. I see things that interest her. And it may not be anywhere close to the holidays. It may not be anywhere close to our birthday or our anniversary. It might be anywhere close to.

Any occasion. And I will buy it and put it in the closet. Don't tell her. But behind me in there is a number of gifts that I bought a couple of months ago because I know that's what she wanted. But I got ahead of the game. So I'm not piling everything into just a couple of weeks. So in the future, what you really want to do is start paying attention, being aware, whether it's for birthdays, whether it's for anniversaries, whether for any occasion, and start getting ahead of the game so you're not compressed in that time. Because here's the other thing that we need to think about when we talk about holiday spending, and this goes to number 11, and that number 11 is this. You gotta think about travel costs.

Because it's not just the gift that you're dealing with, but if you're going to go see family, if you're going to, even if you're going to drive, I mean, heck, gas prices here in California are $7 a gallon. So when you talk about holiday spending, we need to consider all of that, including food, travel. All of those things come into play and we need to look at it. We don't. I don't have to tell you that groceries, grocery expenses have gone up. What do you think's going to happen with the holiday groceries? They told. I heard that there's a shortage on turkeys. You know, all kinds of stuff. So when we talk about holiday spending, it's not just the gifts. It's travel, it's food. It might be clothing, because you got to get a new, new dress, a new outfit, a new something, a new suit, something like that. Okay, that leads me to number 12.

Number 12 is use online.

To avoid temptation. Here's What I mean by this, if you see a great retail store, there is psychology built into.

Their floor plan. Okay? There's a reason they have the knickknacks and junk by the cash registers. One, they're high margin. Two, they're easy buys. Three, you just dump them in the cart to do that. But there's a reason that they'll put one or two sale things at the frontish store, the rest of the sale things in the back of the store because they're going to move you through the store. And now all of a sudden, instead of shopping from a list, you're shopping from temptation. But when we go online, unless we go into the black hole of Amazon and shopping and Etsy and all those things, but when we go online, we go, I'm going to buy this specific thing, you can avoid that temptation of getting sucked in by the psychology of the floor plan. The balloons and the salesperson say, oh, let me show you this. What about this? You know, I love it. They get you into the dressing room because you want to try something on. And then they come and say, I found this I thought would look nice on you. And they give you that to look at. And so, and they, they start feeding. They know what they're doing, they're enticing you with temptation. And so here's the thing. These 12 things can help keep you safe during holiday shopping. And when I say safe meaning that you're not going to go deeply in debt, you're not going to break the bank, and you're manageable, you, you get a manageable outcome. Look, I'm not here to say, you know, ba humbug on the holidays, don't spend money. I'm here to just ask you and invite you to spend smartly, to make a list, to know exactly who you're shopping for, you know, where are they and in the priority to know what your limit is and to try and massage and work within that limit, to plan ahead, to make it easier on you, to be aware of some of the things that will remove the friction from buying, where you may end up buying more and costing more in the long run because of interest rate charges and fees and those kinds of things. So the whole idea of this episode really is to say, how do I shop smart in a way that I can take care of the people that matter, to be generous, to be giving, to be in that holiday spirit and give without knowing something, that down the road, 60 days, 90 days, that I am going to regret it because I am sucking for Air. Because I don't have the cash to pay the bills.

Because I know one thing.

That if the people you gave the gifts to knew that you were struggling to pay for the gifts you gave, they wouldn't have wanted you to do it, because that's how much they care about you. So once again, this isn't about not giving. This isn't about not being in the holiday spirit. This is about sitting back and saying, hey, what can I realistically do? And being okay with it. And if that's thousands of dollars, let's do it. I mean, I love gift gifting. Gift giving is my love language. I love giving gifts. So I spend a fair amount during the holidays and on all occasions where I give gifts, that's just the way I am, okay? But I plan for it. I get it. And it brings a lot of joy to me to do that. So I do that. But I don't do it on credit in a way that I can't pay it off. And I'm not carrying balances for the next year. So by the time I get to the next set of holidays, you know, I'm just paying off the other ones and I go back into debt to make it happen. So all of this is to say, spend smart. Realize that the true gift is your love. The true gift is your generosity. The true gift is in the experience you create. The true gift is in sharing moments that matter now. Go out there. Celebrate with the people you love. Celebrate the holidays in a big way. Celebrate the new, new tomorrows that are coming. Have gratitude for what you've got. Have gratitude for what is coming your way. And be a role model for those that are following you in living a life that is full of richness and not just possessions. Okay? As I've always, always said, always strive to live a life that outlives you. I hope you found this of value. I hope that you saw this in the spirit that it was meant. And I hope that you have an incredible holiday season. Talk to you soon. Cheers.

Thank you for listening to the affluent entrepreneurship with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

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