How Overspending on Holiday Decor Is Jeopardizing Your Retirement
Written by
Cindy Lamothe
Edited by
Zuri Anderson
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Overspending on holiday decor may seem like a harmless annual indulgence, but according to experts, it can have a profound cumulative effect on your retirement savings.
“Every dollar allocated to non-essential, short-lived items is a dollar not invested in your future,” said Dennis Shirshikov, head of growth at GoSummer and professor of finance at City University of New York. “The opportunity cost of this spending becomes significant when you consider the power of compound interest over time.”
Below are experts’ highlight why your holiday decor addiction is jeopardizing your retirement.
You’re Sacrificing Your Retirement for Items That Will Get Discarded
“If you spend an extra $1,000 on holiday decorations each year, that amount could grow to approximately $76,000 over 25 years with an average annual return of 7%,” said Shirshikov.
He said that’s a substantial sum that could bolster your retirement nest egg, sacrificed for items that often end up stored away or discarded after a few uses.
David Milo, financial advisor and owner of Independent Lending, equally noted that while spending money on holiday decorations could seem easy to ignore, but if for example, $500 a year is deposited into an E-Trade account with 7% worth of interest it would amount to over 50,000 in 30 years.
You’re at Risk for Accumulating High-Interest Debt
Moreover, Shirshikov noted that habitual overspending can lead to accumulating high-interest debt.
“Credit card balances carried over months or years accrue interest that erodes your financial stability,” he said.
He said this debt not only affects your ability to save but can also increase financial stress, potentially leading to delayed retirement contributions or early withdrawals from retirement accounts — both of which have long-term consequences.
Milo agreed that the implications of debt are especially risky.
“Many people finance the purchase of holiday decorations using their credit cards.,” he added. “If that is the case, rolling over balances means interest builds up and consequently decreases future investment monies.”
Increase in Lifestyle Creep
“Intensive spending during the holiday season leads to what’s termed as lifestyle creep,” said Milo.
These kinds of lifestyles, he explained, caters to the expenditure and neglects long term aspects such as retirement planning or putting aside savings for a rainy day.
Advice on What To Do Instead
According to Shirshikov, non-standard options to mitigate this financial drain include embracing minimalist or DIY decorations, which he said can be both budget-friendly and personally rewarding.
“Hosting a decor swap with friends or neighbors is another creative way to refresh your holiday look without additional spending,” he added.
Additionally, he noted that investing in quality, timeless pieces can reduce the need for yearly purchases, allowing you to allocate more funds toward your retirement.
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