Financial fortitude \fi-nan-cial for-ti-tude\ (n): Mental and emotional strength in dealing with financial matters.
Wouldn’t we all like to have a little more financial fortitude - especially as the holiday season draws near? It’s really already here—forty percent of shoppers begin shopping before Halloween. The National Retail Federation (NRF) estimates that holiday sales will reach a staggering $586 billion in 2012. Recall, a billion is a thousand million. So, holiday sales for 2012 will roughly be $586,000 million dollars. That’s up 4.1% from 2011 which saw an increase of 5.5% over 2010. If my math is correct and assuming 127 million US households, that’s a whopping $4,614 and change per family. That’s an average of $1,953.33 for every man, woman, and child in the U.S.
From the above it is clear that our financial fortitude is flagging. But, there’s hope. We are not doomed to repeat the same financial mistakes of our forefathers. Although, if I was a betting man, I would wager that we will. It appears that the recent Great Recession did not teach us a needed lesson. Savings rates are down after a brief uptick during the depths of the recession and credit card balances and late payments on said balances are up as well. Let’s face it; we are a nation in love with shiny objects. We have a bad case of the “Shopping Jones” (Jones was a 70s term for addiction, okay, so I am a child of the 70s, 1970s not 1870s as my children might joke).
But, I digress. What can the average Joe and Jill consumer do to fight the $132 billion dollars spent by Madison Avenue last year to convince us that happiness can be purchased on-line, at the mall, or from a catalog? Try any or all of the following strategies when attempting to enhance your financial fortitude this holiday season.
5 Tweaks to financial fortitude
Tweak \twēk\ (noun): to make a minor adjustment to. Here are five simple tweaks you can make to spend less and save more:
1. Consider a “Plastectomy”. It’s a fact. When we use credit cards we spend more than when we write a check or pay in cash. It has something to do with the “pain of paying.” When we use credit cards, the pain of paying is low so we are more likely to spend. When we write a check, or heaven forbid, pay cash, the pain of paying is much higher. Counting out the green is just too painful for most of us. Try going on a “cash only” budget this year for your Christmas shopping. I promise you will spend a lot less than if you surrender the plastic to pay for your purchases.
2. Scared Straight. If you want off the credit card bandwagon, visit a local Debtors Anonymous meeting. The tales of woe wreaked by the lack of financial fortitude shared at these meetings will be enough to scare straight even the most dedicated credit card user.
3. Let cooler heads prevail. Implement a 24-hour cooling off period on all purchases over $100. More often than not, once you have let cooler heads prevail, you will realize you dodged another financial bullet.
4. The envelope please. This may be a low-tech solution to staying within your budget but it works. Set your budget for Christmas and place this money in your “Christmas spending” envelope. When it’s gone, you’re done shopping. The fact that you’re using cash will also help you control your spending. And, as you see the money slowly disappear, you will be more careful with each subsequent purchase.
5. It’s “much easier to avoid temptation than it is to resist it.” Identify situations in which you are more likely to spend and avoid them like the plague. Block tempting websites from your computer, avoid friends who are frivolous spenders, and by all means, “just say no” to the mall. Cutting back on TV watching also works surprisingly well.
Dr. James A. Roberts is a researcher, professor and author with approximately 75 articles published in the academic literature. He is currently the Ben H. Williams Professor of Marketing at Baylor University in Waco, Texas where he has been a faculty member since 1991. A primary focus of Dr. Roberts’ work over the last 10-15 years has been the psychology of consumer behavior. His book, Shiny Objects, takes a careful and amusing look at how our love of material possessions impacts our happiness and what we can do to find true happiness in a culture awash in material possession love.