THERE is a flurry of Christmas advertisements on both traditional and social media, after all, “Tis the season to be jolly.”

But what will it cost you to be jolly? The advertising loan space has been quite competitive and appealing this holiday season — from “combo loans” to the unwrapping of special Christmas loans with attractive interest rates and payment plans.

Some consumers are gearing up to swap their long-term goals for a season of instant gratification. Is the fun worth the cost? A new year beckons with uncertainties and challenges. It’s prudent for consumers not to get carried away by the euphoria the season brings but to instead control discretionary spending. If you have to borrow to go on vacation, then you may need to consider delaying that special vacation until you can afford it. Be mindful that the debt is likely to last longer than the vacation, and it also reduces the amount of funds available for investing.

Experts say consumers are wired to think of short-term gratification rather than long-term goals. This explains why spending increases during the holiday seasons and especially at Christmas time. Bonuses and profit shares are usually paid to employees in December. Bond interest payments and dividends also add to the pool of money in circulation. Some consumers feel pressured to spend more because of the shopping spree happening around them — they don’t want to feel left out of the festivities of the season. Where income falls short, borrowing fills the gap.

Some years ago, at a pixie exchange, a former colleague was dissatisfied with the gift she got. She wanted a luxury brand but instead received an “imitation” gift from her pixie. The luxury brand was, however, more than likely above the threshold for the pixie gift. The lure of luxurious items or gifts can prove costly for the giver.

According to financial psychologist and researcher Dr Brad Klontz, “only broke and insecure people flex luxury brands”. According to him, luxury brands appeal to consumers who seek “outward displays of wealth”. He said the desire to look rich stems from feelings of insecurity, and such persons hope to give an impression of wealth which, unfortunately, “keeps them broke”.

In Jamaica, holiday loans are taken up mainly by low- and middle-income earners. This demography can be easily caught in a debt trap. Going into a new year with additional debt may cause much regret and distress. Consumers of all ages must consider the pros and cons of taking on new debts. That pricey gift can become a costly mistake.

There are consumers who have decided to exhaust their emergency funds to purchase gifts for family and friends for instant self-gratification but please be reminded that emergency funds are designed for unforeseen or huge, unexpected expenses. Any decision to splurge using emergency funds on short-term holiday celebrations can prove disastrous in the new year — when an emergency may occur. Careful consideration is needed at this time. It’s best to look ahead and consider the future before leaping into a spending spree or accumulating debt. Debt or loan repayment and essential recurring bills — such as mortgage, rent, and utilities — should be prioritised over gift purchases. Loans and credit cards are touted by lenders for holiday shopping but the convenience of and ease of access to these facilities can lead to overspending. Scientist and author Benjamin Franklin once said “Creditors have better memories than debtors.”

Adult employees or seniors should not lose their long-term focus as retirement planning is a priority. An excellent option is to invest a portion of your bonuses this Christmas. Investment accounts make perfect holiday gifts. Some workers are receiving retroactive payments this month, and monies can be allotted for emergency funds and long-term investments.

How we manage our money in this season will determine where we stand next year. Being a high-income earner means little if adequate investment plans are not in place for the future. An article published by US-based Business Insider reported that retired and renowned actor Jim Carey announced that he has come out of retirement because he “needs the money”.

Now is an opportune time to reflect on the Christmas story which tells of baby Jesus who was born in a manger and received gifts from three wise men. The wise men’s gifts were given based on a long-term goal. Let’s be wise about the gifts we give this Christmas.

Don’t be trapped by bad spending habits. It’s not too late to devise a spending plan before entering the New Year. A professional and experienced financial advisor can assist. One of the world’s most successful investors, Warren Buffet said, “Chains of habit are too light to be felt, until they are too heavy to be broken.”

Grace G McLean is a financial advisor and retirement specialist at BPM Financial Limited. Contact her at gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com