December in Wisconsin. It’s cold, it’s windy, it’s dark – and this time of year, we can safely predict an uptick in family gatherings coupled with an uptick in spending. In fact, the November-December holiday season typically accounts for almost 20% of total annual retail sales. 2024 holiday retail sales were just shy of one trillion dollars. But here’s the real question: does that spending actually result in lasting joy and happiness?
Why We Can't Help Ourselves
To truly understand the human desire to spend, we have to understand our own brain chemistry first. Spending money taps into the brain’s reward circuitry, with dopamine acting as the chemical driver of anticipation, motivation, and reinforcement. Research shows dopamine spikes before the reward, during anticipation. This makes seeking the reward exciting and explains why planning or shopping can be more enjoyable than actually owning the stuff you shopped for. I personally can’t help but think about how many gifts sit unused for long periods of time after the initial excitement of unwrapping has passed.
Understanding this brain chemistry explains why we overspend – but it also shows us the path forward.
A Better Approach: Aligning Spending with Values
I am not suggesting that you should never spend money. That would be absurd. Rather, what I am suggesting is that we should all put some effort towards developing a thoughtful strategy for spending money that aligns with each of our own personal values.
A lot of people focus their efforts on developing, measuring, and maintaining strategies to accumulate money. Few people put effort into developing strategies for spending money. As Morgan Housel states in his new book The Art of Spending Money, “Money is a remarkable tool that can provide a better life if you know how to use it. But knowing how to use it is quite different from knowing how to acquire it.”
Part of the challenge is the pressure we feel. There’s a fear of not spending enough, the guilt when we see what others are giving, the weight of expectations from family and friends. Social media has only amplified these pressures, with influencers attempting to persuade us (or our kids) to part with our dollars in exchange for whatever product de jour they are slinging.
This isn’t a new problem. Chuck Palahnuik captured it perfectly in his 1996 novel Fight Club, which served as a dismal critique of materialism in America at the time:
“You buy furniture. You tell yourself, this is the last sofa I will ever need in my life. Buy the sofa, then for a couple of years you’re satisfied that no matter what goes wrong, at least you’ve got your sofa issue handled. Then the right set of dishes. Then the perfect bed. The drapes. The rug. Then you’re trapped in your lovely nest, and the things you used to own, now they own you.”
I’m not sure much has changed in the 30 years since. Today, are social media influencers values aligned? Almost certainly not. Housel points out that you need to be careful that your money does not own you. Blindly adopting spending habits of others (keeping up with the Joneses) whose values don’t align with yours is a quick path to disappointment. Do you own your stuff, or does your stuff own you?
What Actually Brings Lasting Happiness
For my own family, in recent years we have shifted spending away from things and towards more experiences. My kids still laugh about the family vacation to St Pete beach over four years ago. Let’s just say that I may have had an epic Dad fail on the giant inflatable slide out on the beach . . . and it’s possible that video evidence exists. I admit nothing, but the kids will never let me forget. I’ll take lifelong memories and laughter every time, even if it comes at my own expense.
Research backs this up. A 2014 study from Cornell University found that experiences create 20% more lasting happiness than material goods. Why? Because experiences become part of our identity and help create shared memories with loved ones.
We certainly still spend money on things, but we often try to buy things that lead to shared experiences. Spending on holiday decorations is one way that I choose to spend on things that lead to experiences. The kids help me pick out the decorations, and we all work together to decorate the yard and the house. It’s a tradition they look forward to every year.
For many people – including retirees who say family experiences are their most cherished holiday memories – this idea rings especially true. So instead of another luxury item, consider gifting a family trip, or tickets to a concert or other event. These moments will be remembered long after the wrapping paper is gone.
Legacy and Generosity
The holidays aren’t just about giving gifts—they’re about giving meaning. For many affluent families, this is a time to reinforce values and legacy.
Charitable giving peaks in December, with 30% of annual donations occurring in the last month of the year. Changes in consumer behavior have changed charitable giving habits over the years. The shift to more online retail, and fewer cash transactions has led to a decline in the amount of money collected by the Salvation Army bell ringers with their iconic red kettles.
Consider making giving a family tradition. Involve children and grandchildren in choosing causes to support. It’s a powerful way to teach empathy and create shared purpose.
A Practical Framework for Holiday Spending
When making spending decisions this holiday season try using this simple framework to help keep spending aligned with your values:
- Meaning: Does this purchase reflect what matters most to you?
- Memory: Will it create lasting joy or just a momentary thrill?
- Moderation: Even if you can afford more, is this reasonable?
Consider setting a ratio for your holiday budget:
- 40% for gifts
- 40% for experiences
- 20% for charitable giving
The above is only a simple example. Set the ratios to whatever best aligns with your values. Using this approach can help drive balance between generosity, joy, and legacy.
Closing Thoughts
This season, before clicking the ‘buy now’ button, think about how you spend money to create meaning, memories, and a legacy that lasts.
Before you make your next purchase, pause and ask:
What’s the most meaningful gift you ever received? Chances are, it wasn’t the most expensive—it was one that touched the heart the most.
