How Overspending on Holiday Decor Is Jeopardizing Your Emergency Fund
Written by
Cindy Lamothe
Edited by
Angela Corry
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If you think you can’t possibly save up for an emergency fund — look at your holiday decor spending — and think again.
“The holidays cost a lot more than the demands of an average month,” said Melanie Musson, finance expert with Insurance Providers. “When you add holiday decor to the cost of gifts, parties and attire, your spending will probably be higher in December than in any other month.”
She noted that if you spend more than you earn, you’ll have to go into debt or tap into your emergency fund.
“Keep your priorities straight even when you’re tempted to make excuses for spending more than you should on unnecessary things.”
Below are some ways your overspending holiday decor is upending your emergency fund.
It Depletes Your Income
One of the biggest ways spending too much on holiday decor jeopardizes your emergency fund, is by depleting your income, said Mafe Aclado, finance expert and general manager of Coupon Snake.
“Here is the fact, when you prioritize your nonessential so much that you spend too much on things you can do without, you will find that you barely have enough to spare for your essential needs.”
She noted this behavior makes it even harder for you to have any funds left to invest in an emergency fund.
“Chances are that you may even end up breaking into the little you have saved up for emergencies just to be able to get by.”
Also, she said your reduced cash reserves and drained savings equally make it difficult — if not impossible — to take advantage of investment opportunities should they present themselves.
“Or at least make better use of these opportunities.”
It Increases Your Debt Load
Another way spending too much on holiday decorations jeopardizes your emergency fund is that it increases the risk of increasing your debt load.
“When you set out to spare no costs on your holiday decor, there is no guarantee that you will not end up charging more than you will be able to pay back at the end of the month to your credit card,” says Aclado.
She said this puts you at risk of accumulating more credit card debts plus the high interests that come along with them.
“Now let’s face it, the odds that you will be able to grow an emergency fund sufficient enough for emergencies at a healthy rate while paying off high-interest loans is undoubtedly unfavorable.”
Bottom Line
“Spending excessively on holiday decor increases not only your financial stress and anxiety but also leaves you with the feeling of guilt and regret at the realization that you have risked your financial security and stability,” Aclado summed up.
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