facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Holiday Spending Thumbnail

Holiday Spending

Nearly $1,300. That’s the average amount PwC is predicting consumers will spend this holiday season on gifts, travel and entertainment.1 And while it’s perfectly fine if you don’t bat an eye at spending $1,300 (or more), what I’m hoping is that you’ve got it factored into your financial plan.

Advisors Aren’t Scrooges

Look, even financial advisors like the holidays! I’m not here to Scrooge anyone into regifting unwanted items, cutting back on the giving spirit, or even foregoing gifting all together. Predictions of consumer holiday spending increasing 2.7%1 to 5%2 from last year is great for the economy and, even more important, people’s happiness.

Most people probably don’t consider holiday gifting a major purchase like a car, unless they use holidays as an occasion to gift those big purchases. But when you factor in holiday spending year over year, it adds up quickly. For example, let’s use the average $1,300 they’re predicting for this year: If your holiday spending is $1,300 over the next 25 years, it totals $32,500. Then let’s say you invested your holiday spending with an average 7% return, you’d have an additional $95,000 in your portfolio.3 (If you’re wondering why 7%, see this NerdWallet explanation)

That $95,000 doesn’t even include spending increases due to inflation! I can say with certainty that most people would love an additional six figures in their portfolio when it comes to their financial planning.

Plan For Your Holiday Spending

So, while I said I’m not here to be a Scrooge, I am here to be a voice of reason and planning. I will never advise people to spend more than they’ve budgeted, and in my vocabulary, budgeting is another way of saying planning. My jaw wouldn’t drop if you told me you wanted to spend 10x the average on your holiday spending each year, provided we established that objective during the planning process.

I understand unexpected expenses come up, but the more we’re able to plan, the better. See, when we’re doing our projections and predictions for a financial plan, we’re able to determine where money comes from and when. This gives us several advantages for tax planning and puts us in a position to best distribute monies for portfolio longevity.

Let’s pretend you have just one income stream for retirement, and it’s invested in the stock market (I know this isn’t the case for you as such a savvy investor, but humor me). If you’ve planned out your distributions, you’ve probably planned out the tax implications and you know how long your money will last you.

But let’s say you decided to withdraw some additional money that year, AND it happens to be a down time for the market. One of the issues is you weren’t planning on taking that money out, so now you’re likely forced to sell some positions that you hadn’t planned on selling, resulting in some less than ideal tax implications. Had you planned for them, you may have been able to reduce your tax burden.

In addition to accounting for additional taxes, the market was also in a down time. This means when the market begins to rebound, you’ll have less in your portfolio to rebound. There’s a reason they say buy low, sell high. If you’re forced to sell low to accommodate your additional funding needs, then your rebound highs won’t be as high.

The lack of planning in this scenario results in a double hit (taxes and selling low) on your portfolio. Both of those hits will end up reducing the amount of time your portfolio can sustain your needs.

Expect the Unexpected – and Plan Accordingly

Like I said, I know life happens and unexpected needs arise, but your financial plan should have some of that accounted for. If you know your nature is to spontaneously plan a lavish trip each year, let your advisor know so they can factor that into your plan. Or if you’re a huge holiday spender, let them know that too!

You can ask my wife, I am NOT a natural planner when it comes to most things in life – she organizes vacations, itineraries, meals, kids’ schedules, etc. But when it comes to planning our financial life, I make sure to account for the unexpected, and I encourage you to do the same. If you’re not sure if your current plan factors in the unknown, or if you want to know how your plan does so, just ask!


  1. PwC. (2019). PwC 2019 Holiday Outlook. [online] Available at: https://www.pwc.com/us/en/industries/consumer-markets/library/2019-holiday-outlook.html [Accessed 7 Oct. 2019].
  2. Whitten, S. (2019). Holiday spending expected to rise 5%, but don't expect bigger crowds at the mall—here's why. [online] CNBC. Available at: https://www.cnbc.com/2019/09/23/holiday-spending-expected-to-rise-5percent-this-year-driven-by-online-sales.html [Accessed 7 Oct. 2019].
  3. Bankrate. (2019). Compound Interest Calculator - Daily, Monthly, or Yearly Compounding. [online] Available at: https://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx [Accessed 7 Oct. 2019].
Get Started