3 Personal Finance Lessons to Learn from Black Friday
Smart consumers can learn a lot from Black Friday.
Thanksgiving and Black Friday are rapidly approaching. This time of year, I always find myself pondering the juxtaposition of these 2 holidays that represent 2 vastly different ideologies.
The Friday after Thanksgiving marks the point when retailers are no longer operating at a financial loss; instead, they are “in the black,” the term from which Black Friday got its name. Now, many Americans recognize Black Friday as the official mark of the beginning of the holiday shopping season.
The irony of celebrating a national day of gratitude immediately prior to a day of excessive consumer consumption is not lost on most successful people. However, when this time of year rolls around, we can try to be optimistic about it.
Retail stores are merely obliging a consumer demand, so we can’t blame them too much for their encroachment upon the once-sacred observation of being closed on Thanksgiving.
As a way to extract a positive from a negative situation, here are a few lessons that successful people can learn about personal finance from the Black Friday madness.
Lesson #1: Budgets Can Be Empowering
Many people feel overwhelmed when they hear the “B” word, but simply viewing a personal budget in a different way can make a big difference.
Imagine looking at your personal budget as you would a business profit-loss statement. The losses would be your fixed monthly “operating” expenses such as loan payments, food, and gasoline, while your family income would be the revenue. Profit would be the amount left over after your break-even day.
If your family monthly expenses total $8500, and your family brings home $500 each workday, then how many days do you have to work this month to break even?
$8500 monthly expenses/$500 daily earnings = 17 days until your monthly “Black Friday” break-even day
Armed with this formula, you can make more informed decisions.
Will you work more days so you can put more money into savings? Or will you spend the remainder of your month with your family?
The correct answer is the one that most directly improves your happiness and well-being. Successful people know that happiness is about attitude and empowerment.
Lesson #2: Create a Holiday Giving Plan
When I think of holiday shopping, I think of budgeting for the most wonderfully expensive time of the year. Then, I start to feel overwhelmed by the thought of budgeting for the many spontaneous shopping trips that will inevitably arise, and I begin dreading the holiday season. It is quite a vicious cycle.
This year, I began to wonder whether I could incorporate good business practices into my personal spending habits. Would this help curb the dread of budgeting? What if I regarded my family’s budget as I would my business?
In business, profits are handled in 1 of 2 ways:
- They are reinvested into the business, or
- They are generously distributed to employees, stockholders, or philanthropic causes.
Therefore, you could optimistically say, “I get to spend this amount on food that will feed my loved ones, I am lucky to have this amount to allocate to gift giving, and I am able to allocate this amount for giving to others who are not as fortunate as myself.”
Changing from a “can’t have” mindset to an attitude of abundance and gratitude is one of the pillars of success.
Lesson #3: More Spending Does Not Equal More Happiness
Spending every dime of your hard-earned money usually isn’t as satisfying as the thought of spending every dime of your hard-earned money. That new Infiniti you have been coveting will not provide a sustained level of happiness, but having a reliable vehicle to safely bring your family together will.
Have you ever heard that the best gifts in life are free and the best money is spent on experiences? You will most likely not even remember that item you had to have.
My family has a rule that if you want something that costs more than $100, then you have to wait at least 1 month before buying it. If you still have to have it after that month, then you can get it.
Impulse buying is a huge budget buster. Taking control of your money instead of letting it control you is the first step to being successful financially.
Knowing your break-even day gives you power, while not knowing where your money is going can make you feel very helpless. Paying attention to finances brings happiness and success.
What will you do after your break-even day?