Why Holiday Shopping Events Might Not Be The Deal You Thought

According to the Motley Fool, the typical American holds a credit card balance of $6,194 — which may surprise you (or maybe not). While there are many reasons why people carry such a large amount of debt, unnecessary spending is one of the culprits.

For this reason, shopping events such as Amazon Prime Day, Black Friday, and Cyber Monday can become an issue. Although many people anticipate these events in hopes of finding a great deal, most end up spending money they don’t have (or that should go to something else) with the justification that the purchases were on sale. But during a volatile time like the ongoing coronavirus pandemic, saving and debt avoidance should be a priority.  

Consumer finance expert and money writer Charlotte Burns told Metro.co.uk that even before the pandemic, huge overspending during the holiday season was a problem. But now, “The pandemic has impacted a lot of our mental health,” Burns says, which means many people could feel more temptation to make unneeded purchases.

“There has been increased online shopping since the pandemic began, and some of that will be because we’re hitting the high-street less. However, a lot of that will be people who are bored and stressed spending money they don’t have,” she added.

Make Sure You’re Actually Getting A Deal

If you spot a product normally priced at $99 on sale for $49, you might spring at the chance to buy it. But before you break out the plastic, The Motley Fool recommends that you ask yourself:

 

  • Were you going to buy it, to begin with?
  • Is it a necessary purchase? 

 

For example, if it is a kitchen appliance you need and you’ve known you’ve needed it for a while, that’s $49 well spent. However, if it’s something you didn’t plan on buying before and don’t urgently need it, you aren’t saving money; you’re just spending it. And if you use a credit card, you’re also adding to your debt. 

For this reason, promotional shopping days can spell trouble for less-discerning consumers. 

Burns says, “From my experience, there will be a product or two which is impressively reduced (but they tend to sell out quickly) and you’re left with 10 – 20% off items. This is fine, but you can probably bag that kind of reduction later on in the year – there’s no need to panic buy for most of it.”

“If there is something you were definitely going to buy and it’s a bargain – go for it. But if you don’t need anything, it’s very dangerous to browse deals because it’s likely you’ll end up with something you don’t need. 2020 is a rough year for many of us, and it’s probably not going to get easier, as more and more people are impacted financially by the pandemic. Now is not the time to be lining Amazon’s pockets,” she continued.

Prime Day may be over, but there are many more shopping days to come. The holiday season can be a notorious time when consumers rack up debt, but there are things you can do to avoid it. The Motley Fool suggests:

 

  • Making a budget for holiday spending
  • Developing a shopping list
  • Following that list

 

If you experienced a disruption to your income over the last year, this time could be especially challenging. You may feel guilty for not being able to afford as many (or any) gifts this year, but it’s important to remember that your financial health is more important. 

If buying gifts will put you in a more difficult place, don’t do it. Talk to your friends and family — everyone is sure to understand, especially this year. Besides, this could be a good time to flex your creativity and look for affordable ideas, homemade items, or even offering to babysit instead.

Burns also says that instead of giving Amazon more of your money, consider buying local. Many small businesses have been hit especially hard during the pandemic and could use your patronage more than Amazon or other large chains. 

If you struggle with impulse buying, she recommends, “When it comes to shopping, recognize that you might be buying because it’s making you feel better, not because you really need the product. There are lots of people who think that because it’s been a hard year, they need to spend more money at Christmas than they usually would to make up for it. It would be a mistake to start 2021 out with debt when the UK is so unstable.”

Instead, Burns advises, “If you’re doing OK now, I’d recommend that you don’t take it for granted and get yourself a rainy day fund (aim for one to three months wages) so you’re covered if you were to hit harder times in 2021.”

 

Sources
  • Backman, Maurie. “Why Shopping Events Like Prime Day and Black Friday Are So Dangerous.” The Ascent, The Ascent, 16 Oct. 2020, www.fool.com/the-ascent/credit-cards/articles/why-shopping-events-like-prime-day-and-black-friday-are-so-dangerous/.
  • Lindsay, Jessica. “Money Expert Warns against Buying during Amazon Prime Day and Black Friday.” Metro, Metro.co.uk, 13 Oct. 2020, metro.co.uk/2020/10/13/money-expert-warns-against-buying-during-amazon-prime-day-and-black-friday-13415312/.

 

 

 

 

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