The best gift to yourself: Avoid these three common spending mistakes


With the Christmas shopping season in full gear, it's important to remember these three basic money rules, so that this shopping season doesn't bring a lump of bankruptcy coal for your stocking.

Cash is King
While it sounds simple to spend only the money you actually have, in practice it's much more difficult. With consumers being bombarded from every angle to spend spend, spend and pay the consequences later, the easiest way to ensure that this holiday season doesn't bring personal economic collapse is to use cash. Make your gift list, and then withdraw cash, and use it to make purchases. This will give you the discipline to spend only what you have. Each spending decision will need to be analyzed as to its importance. If you hear the call of the amazing special in aisle four, and decide to impulsively buy the special, you may have no money left to get your best friend a gift. Just like your mother told you; it's all about consequences.

Don't keep up with the Joneses
It's very tempting to try and keep up with our well-off friends. We know that they are not only going to buy presents for anyone and everyone, they are going to spend a small fortune in doing so. While we all enjoy the spirit of giving, we can't get carried away by it. Before you think about shopping, make a budget and see just how much money you have to spend this season. If you go into your shopping adventure knowing how much you can spend, chances are that at the end of the day, you will be able to stick to that plan. However, If you wing it and make it up as you go along, well that's when trouble hits. Before you know it, you will have incurred credit-card debt that will take months or even years to pay off.

No Quick Fix
Don't plan on paying for your holiday excesses by thinking that you are going to "get rich quick." Chances are that you aren't going to win the big lottery, or pick that stock that will return 1,000% next year. We need to live in reality, and thinking that your financial happiness is going to ride on winning the lottery isn't particularly rational. The key to growing wealth is to save regularly and invest. There are no shortcuts.

Acting financially responsibly may be the best gift you can give -- to your family, and to yourself.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of