Money Smart Gifting During the Holidays

financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond well, 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 absolute entrepreneur. Hey there, welcome to this episode of the African

Entrepreneur Show. And this one is a special one, because it's a special time of year and let's face the holidays are a special time they are 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, 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're actually taking 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, that was gonna be a bah humbug here. 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 regretted 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 give smartly without breaking the bank without putting us in a situation. So 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 money geek.com. And some of the stats were were interesting. On average, on average, the Americans spent around a little over $1,100 in holiday shopping, okay, which to some might be a lot, some might not be much. In fact, there's there's was 13% actually spent more than $3,000. And so there can be a fair

amount of spending. Now 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 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 all on it is going to get more expensive, ie 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 gonna 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, 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 holidays, 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 answer. 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 in 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 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 your 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 actually do 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 had my 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 in April. So you've got real estate taxes again, due and April 15 is when our taxes are due. So if there's unpaid taxes, those gotta get paid. Also, whether you're doing an extension or not. So this next season, this next six months 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'm gonna 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 gonna jump to the iPad, we'll write some of these things out for you. But the first piece of this as is this is that that number one, literally get clear 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 that are our priority, and we need to

take care of them first. So want to get clear on the on the who's so I make a list of of who is going to be on that list to make that happen. And one of the things that I actually do is, is I start to categorize them in priority, okay. Because the level of priority the level of

spending will shift. I mean you I look at what my list is going to have my wife obviously is is going to have my brother, my, my sister, it's going to have my son, my granddaughter, all 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 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 gonna 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 isn't on the list and to 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 add 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 art, 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 a hand and 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 computer's 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 invite you to just look at at last year's last year's models and see if that that might work. Now, this one I know is is is probably tough for people, but it's really important. We really need to set a budget. I need to get real look. We may be heading into a

recession. I don't know you know i If we look at the technical measures, we are in a recession, because GDP growth has has has declined, but whether we are we have seen some earnings that have come out and people are given guidance on a slower economy in 2023. Well, slower economy means what cutting costs, cutting cost means possibly marketing budget, but

also labor. So there may be some job losses coming in 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, is that if all you can spend as a 1000 bucks, then you spend 1000 bucks, if it's 500, you figure out how to use 500. If

it's 5000, 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 lot of ways to show generosity, caring, compassion, giving contribution. And it doesn't have to come at the end of $1.

Bill. It, it can come from effort, you 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, I my wife is phenomenal and 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 the labor of love that she did. And when went all the way in and created.

What about doing that, where I remember us doing this with the kids at the karate school where they created toys, and they created little gifts and crafts 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 were just by that and by 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 may be a red zone. What I mean, listen, Black Friday, Cyber Monday, all those things, their marketing, their marketing speak, they have they've expanded them. And in fact, they're doing Black Friday sales before Black Friday. And and the reality is, is that a lot of times, it's just an excuse to to do what they call a sale. But I 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 have 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 pole of Black Friday sales. I mean, we have washed on TV, you've all seen

it. Where people are fighting in the stores, people are trampling people in the stores. Oh, my God, how is that? The Holy Spirit. All right. And so before you get caught up in that emotional pull of that, the list, 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 intense 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 going, I'm just browsing and whatever's on sale I'm gonna buy that is where we start to get ourselves in trouble. Now, mind

you, I've done that before. I've spent the night in front of in front of Circuit City in Circuit City going back aways, 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 X offensive 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, once 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 like, normally high or, 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 gotta buy that in December, then when I shouldn't be doing is creating a sinking fund and putting $100

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 late by the time this airs, to be thinking that

way. But in the future, what I want you to do is 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 our 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 on a credit card in and end up running up credit card bills with 1820 25% interest rates on them that we might not be able to pay off for a number of 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 shock which we get. Now I do this, I do this primarily with closure. 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 So I want you to be careful of a 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 again, 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 use 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 $1,000 to buy this, but they go, but here's the deal, we got 0% 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 it was sudden you're all 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. Um, this is something that I do. When Stephanie, 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 anniversary, it might be anywhere close to any, any

occasion. And I will buy it and put it in 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 you 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 being paying attention, being aware, whether it's for birthdays, whether it's for anniversaries, whether it's for any occasion, and start 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 got to 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 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 me, 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 and new outfit, a new something a new suit, something like that. Okay, that leads me to Number 12. Number 12 is used online to avoid temptation. Here's what I mean by this. If you see a great retail store, there is psychology built into their floorplan, 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 I'll put one or two sale things at the front of the store the rest of the sale things in the back of store, because they're gonna 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 floorplan, the balloons and the salesperson say, Well, let me show you this. What about this? Yeah, I love it, they get you into the dressing room, because you want to try something on. And then they come in said I found this I thought would look nice on you.

And they give you that to look at and so and they they start feeling 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 save, meaning that you're not going to go deeply in debt, you're not going to break the bank and you're manageable, you get a manageable outcome. Look, I'm not here to say, you know, bah 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. Wow, 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 meant it 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? I mean, okay, well. And if that's 1000s of dollars, let's do it. 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 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 value. I hope that you saw this in the spirit that it was met. And I hope that you have an incredible holiday season. Talk

to you soon. Cheers. Thank you for listening to the affluent entrepreneur show 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 mele ram.com Ford slash group and I'll see you there