Avoiding retail remorse
The weekend stretch of Black Friday through Cyber Monday has become a pop culture phenomenon. In fact, these two days together combine to create one of the cleverest marketing gimmicks of all time. But with almost half of Canadians already pre-empting added stress during the holidays due to spending pressures, how did these splurging frenzies come to be?
Traditional accounting practices use red ink for a negative number and black ink for profit. The fourth Friday in October marks the beginning of the period when accountants would switch from red to black ink.
Some clever marketers seized this opportunity to bookend American Thanksgiving and ramp up pre-Christmas sales. They called it “Black Friday,” promoted it like crazy, and watched the crowds mob the stores. As momentum increased, Black Friday migrated north of the border, eventually also merging with the digital world to create “Cyber Monday.”
In fact, Black Friday trumps Boxing Day as the time most Canadians are shopping for a bargain. The Retail Council of Canada’s 2019 Holiday Shopping survey found 43 per cent of Canadians plan to take advantage of Black Friday deals meanwhile, only one-third will shop the sales on Boxing Day.
For most consumers, however, the irrational exuberance of the sales often develops into a case of buyer’s remorse. Shoppers take a step back to realize they’ve blown their budget out of the black and (deeply) into the red. And it hits people right in their wallet, purse, bank account, and credit card statement, in about a month’s time.
But there are ways to combat the overwhelming psychological onslaught of Black Friday and Cyber Monday. It’s called a budget – a perfect place to start learning. It’s important to look at a budget more as a process, or as a means to an end. It’s not a straitjacket designed to punish or restrain, but a tool designed to reward. Because, bottom line, financial planning should be about the rewards. Now, during the holiday season, the temptation for instant gratification is almost overwhelming. Not only do we spend hundreds of dollars on useless junk for our families, but also for ourselves – which is just what retail marketers count on us doing every year. And we never disappoint.
Avoiding retail remorse relies on us having the knowledge about where our money is going. Bank statements reveal what lies within – from credit card debt, mortgages and bill payments; it’s vital to subtract the money coming out from the money deposited in. And there are free resources to help, such as The Financial Consumer Agency of Canada’s Budget Calculator.
In addition, pinpointing problem areas will help prevent cash drain. Beyond the typical credit cards and cars, everyone has an area or two where they overspend. That’s OK, as long as consumers we’re aware of these areas and are getting our money’s worth.
The budget helps set goals and establish benchmarks. It’s what retailers do. Why can’t
Canadians do the same? For example, establishing a fixed dollar limit allows for holiday spending right at the outset. Do it per person, per family, per couple, or any which way, but do not exceed it. It’s a psychological trick that forces people to plan their shopping, rather than joining the maddened crowds in the malls and spending on impulse.
Think of the holiday shopping season as a war. Retailers do everything in their power to separate shoppers from their money, with powerful inducements like Black Friday and Cyber Monday at their disposal. Put up a stout defense. And the best defensive tool is the budget.