Psychology of end-year spending and how to stay mindful

This is a season of festive gatherings, but it is also a season where many people spend money. Finance coach and advisor Margaret Njeri says that the spike in December combines festivities, travel, and gifts.

She says there is also a cultural belief that money is meant to be enjoyed when the year ends, so people tend to relax their budgets. Bonuses and year-end payments also add to the sense of abundance, creating a false comfort that encourages indulgence.

Emotions such as nostalgia, celebration, fear of missing out, and sometimes guilt are what drive spending choices.

“Many people feel compelled to make up for what they couldn’t do throughout the year. It results in an emotional high that loosens the discipline we usually apply to our budgets,” she says.

Margaret explains that festive spending is influenced by social pressure to impress through parties, outfits, travel or gifts and comparing social media highlight reels. “People measure their December against everyone else’s, often unconsciously, creating a silent competition,” she says.

Cultural and family traditions play a role, as in many households, December is synonymous with generosity, gifting and going home with offerings. These traditions, while meaningful, can become financially draining when people feel obligated, she says.

Retailers, meanwhile, know how to use psychological cues to trigger festive spending. Limited-time discounts, flash sales, emotional advertising, festive packaging, and “buy more, save more” messaging create a sense of urgency that weakens rational decision-making.

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“We fall for it because December puts us in celebration mode,” she says.

The most common spending mistakes people make during the festive season include shopping without a budget, buying last-minute gifts at inflated prices, succumbing to emotional impulses, taking mobile loans, overspending on travel, and purchasing items simply because they are on sale.

When January arrives, the emotional high of December collides with high expenses like school fees, subscriptions, rent and depleted cash reserves, bringing about financial stress, regret, and anxiety. “Overspending can affect mental well-being, straining relationships and causing self-blame or depression,” she warns.

Mindful preparation, however, can prevent the December financial hangover. She says that not every celebration requires spending, and experiences can also matter as much as items, if not more.

Practical strategies to curb impulsive spending include the 48-hour rule—waiting two days before making non-essential purchases—shopping with a list, carrying limited cash, and avoiding online late-night browsing.

Digital mindfulness is equally important: disable notifications, remove saved card details, track spending in real-time, and leave carts overnight before checking out.

Budgeting wisely doesn’t mean missing out on joy, as category budgeting, as allocating specific limits for gifts, food, travel, and entertainment, helps maintain control.

Cash-envelope methods can reinforce discipline. Families and couples can benefit from a short money meeting to agree on spending limits, share responsibilities, and prioritise essentials while setting aside a January emergency cushion.

Balancing the desire to give with financial responsibility requires creativity. Secret Santa arrangements, homemade gifts, or acts of service allow generosity without overspending.

For those feeling pressure to match others’ spending, she advises focusing on personal financial reality, recognising that debt isn’t a love language, and remembering that long-term peace matters more than short-term applause.

Margaret adds that financially mindful individuals approach December differently. They budget early, save for January, avoid mobile loans, track every purchase, buy intentionally, plan experiences over expensive gifts, and think beyond December 31.

“Their secret is seeing the bigger picture,” she says.

Staying mindful in the festive season, she concludes, is about making conscious choices that preserve joy, relationships, and financial health.

“With preparation, awareness, and intention, it’s possible to enjoy the season fully, without the post-holiday regrets that so many experience,” she says.