Black Friday: Financial pressures and the importance of a good plan

With so much hype around Black Friday (and now also Cyber Monday) sales and increasing criticism of sales that are not real sales, it pays to be cautious at this time of year. Many people feel the pressure to use this time to make purchases and leading into the festive season it is no accident that it is on right now. The Black Friday sales started off as a genuine event where certain retailers would heavily reduce the price on limited items. Now it is often little more than a banner on a website or outside a store.

As we move closer to the holiday and festive season, life can get more expensive. There are holidays, gifts, parties and dinners, and therefore financial pressure. A day of retail discounting makes sense in this context; if you must make some purchases it seems sensible to take advantage of the sales and in the process save some money. If they are genuine discounts, that seems sensible.

We urge you to stop and ask yourself three questions first:

1)        Do your research ahead of time and check if it is a genuine discount against the regular price of this item.

2)        Were you going to make this purchase anyway?

If the answer to both these questions is yes, you can move to the next question:

3)        Can I afford it?? Even if you have a healthy cash flow surplus each month, it is a useful question to ask.

Three yesses and go for it. But what if you don’t get three yesses?  Then it is time to make some decisions. If you are only buying it because it is on sale, you are not really saving any money because you are spending more. That is not to say you shouldn’t do it, but it does feed into the important topic of linking your actions with your goals, what some might call mindful spending. It is also a need segue to the topic of financial anxiety.

Financial anxiety increases at this time of year as spending pressures increase and can hang around until the new year spending hangover when the bills come in. it is a serious issue and is not frequently talked about.

Many people keep their financial anxiety to themselves due to social pressure or the need to present that they are ‘keeping up’. It may also be due to shame, or denial.

A study from the UK regulator, the Financial Conduct Authority have suggested that 43% of adults are experiencing increasing financial anxiety. You can read more about their findings here. When one feels this financial anxiety it can impact other aspects of your life including your emotional wellbeing, your physical health, and your relationships. It is important to address, even though the research also commented that most of these people did not seek help.

if you are feeling an increase in financial pressure, there are a number of steps you can take. The first is identification. We often state that a good financial plan has its foundations in cash flow. It can be a useful exercise to map out your cash flow, your sources of income and your expenses. You can identify areas over which you have more discretionary control, and which may alleviate some of the pressure. If there are not any immediate cuts or changes, you can still plan for actions you can take over time.

Second, you don’t have to tackle it on your own. Speaking with family or friends can be a good place to start and it may be reassuring to hear you are not alone or the only one with these concerns. You can also speak with a financial professional, like Black Swan Capital. Having a well-structured plan is not just about where to invest, it is also about how you manage your existing assets, how you deploy your income and aligning where you spend your hard earned money to your goals and what is most important to you now and in the future.

Clients will often report that completing this exercise of documenting where the money goes, and building a financial plan, reduces stress straight away. It also creates optimism for the future because you have taken the time to think about what is most important to you. Further, you are taking steps to get there.

In summary, financial stress can increase at this time of year, and even if it doesn’t impact you particularly, it is good practice to consider your cash flow, and a useful trigger to ensure your financial plan is in place, up to date and working for you,

Speak with us to make sure you have a financial plan in place that is right for you and delivers the life you want.