Financial Literacy: Don’t get caught up in the Black Friday frenzy
This year, I’ve noticed there are a lot of Canadian retailers jumping on the Black Friday bandwagon. For example, an article in yesterday’s Globe and Mail detailed the different deals stores in Canada are offering to keep customers from crossing the border.
For those unfamiliar with Black Friday, it falls immediately after American Thanksgiving in November. Retailers open early, and offer items at low prices to attract customers hungry for deals. It is similar to Boxing Day in Canada, and it kicks off the holiday shopping season in the U.S.
Since November is Financial Literacy month in Canada, I thought it would be good to remind people to have a game plan if they are thinking about taking advantage of Black Friday deals in B.C. or the U.S.
The first thing to do before taking advantage of any sale or special offer, is to assess your “wants” and “needs”. Getting your priorities straight will keep you on track to realize your financial goals. If something is a “want”, make sure you can afford it. You should also be honest with yourself (i.e. don’t talk yourself into believing a “want” is a “need”).
We suggest using a 1-2-3 rating system to establish your priorities. Here’s how it works:
1) Essential items for healthy living (e.g. basic food, clothing, and shelter, etc.)
2) Items that are not essential, but important (e.g. entertainment, education, etc.)
3) Not essential or important items (video games, new movies, etc.)
Second, be wary of using credit. Putting something on a credit card, and not paying it off immediately can have detrimental consequences on your long-term financial health. A recent study pointed out that B.C. residents are carrying the highest personal debt in the country. Remember, there are shopping events all year round – Boxing Day is just around the corner. It’s better to save for the item you want, than to rush into a purchase that could cost you headaches in the end.
Third, if you decide to take advantage of a sale, keep your emotions in check. Be careful to buy only what you can afford. Impulse buys add up quickly, and can put you in a position of taking on unnecessary debt. Sometimes stores place restrictions on sale items, so even if you have second thoughts, you may be stuck with what you buy.
Finally, don’t get caught up in the shopping frenzy taking place around you. We often shop with friends or family members who have different priorities or budgets. They also have different product knowledge and brand loyalties. Just because someone thinks an item is a good deal for them, does not mean it is right for you.
It’s best to go in with a plan and to stick to your budget. If you do this, you will probably come away with a positive experience. You will also be staying on track with your long-term financial goals.