Posted on: December 23, 2011

Kevin O’Leary’s Four Reasons to Cut Holiday Spending: Keep More by Giving Less

An old holiday adage says that it is better to give than to receive. I disagree. Giving is costly. This holiday season, give your kids the lasting gift of common sense instead of the short-term satisfaction of their entire wish list. Read my four reasons for why you should cut down on the time and money you spend at the mall during the holidays.

1. Don’t spoil the holidays by spoiling your kids
I fly first class and though my kids often travel with me, they fly coach. They need to learn the importance of scarcity. Even if you’ve been lucky enough to be successful, you shouldn’t use that as an excuse to spoil your children. I don’t. I know that for them to relate to the rest of the world, they have to know what it’s like to struggle and work hard. The incentive to work hard is non-existent if you grow up with everything you could possibly want handed to you. Conversely, the incentive to work hard is strong if you’re taught the importance of scarcity from a young age.

I’m not saying you shouldn’t get your kids any gifts over the holiday season — but consider the benefits of a carefully constructed holiday gift reward system. Kids could be rewarded for achievements in the classroom, the soccer field or helping the family with chores. Giving them exactly what they want, whenever they want, is a dangerous holiday season temptation. Avoid it like the plague. If you think that your kids will love you less because you don’t purchase something they’re begging for, realize that they’ll love you even less if you blow their inheritance on a whim.

2. Money can disappear in a flash
In a world where millions of dollars change hands every minute, nothing lasts forever — least of all, money. It can be lost in a heartbeat. Parents who don’t teach their kids these lessons risk raising adults who don’t appreciate the gravity of risk-taking with family savings.

On “Dragons’ Den,” I meet entrepreneurs obsessed with their business ideas. I love to see passion in businesspeople, but too much passion for a bad idea is a dangerous thing. I’ve seen entrepreneurs dump their life savings into hopeless ventures. I hate to see people killing money and I worry that the holidays are getting away with murder.

3. If you create a budget, you will discipline yourself
Try creating a maximum budget for everyone on your holiday shopping list. Under no circumstances should you exceed your pre-determined thresholds. Forcing yourself to live within a budget is an excellent exercise in discipline. If the year has been particularly good, you might allow yourself to increase the budget slightly. Total all of the spending so that you’re confident the ultimate number isn’t too much.

My mother taught me to never spend the principal of any investment. You can spend the interest on the principal, but never the principal itself. This is a great rule of thumb that works perfectly well during the first eleven months of the year. Why should your behaviour be any different during the holiday season?

4. The holidays are a time for reflection
The holidays are an excellent opportunity for reflection on the year that was. You could use the opportunity to take stock of your mistakes and pay down debts. Instead of rushing to the mall, take the time to think carefully about the things and people that matter most to you. Even if it has been a good year, avoid the pressure to spend all of your earnings over the holidays. If for no other reason, think of the children.

  • Anonymous

    I just found this mentor section and love it! I couldn’t agree more with these sentiments. Kids are entirely spoiled over Christmas, and the rest of the year. It gets me I can’t hire a kid to shovel my driveway for a ‘first job’ like my parents did when I was growing up. Kids don’t even have allowances anymore. Why? Because they can get what they want when they want it. It sounds cruel to have your kids in coach while you are in first class by modern day standards but your kids will learn the value of earning first class. Agreed that if you give them no drive they will have nothing to aspire to.

  • Rafael Merejo

    I totally agree. I know friends of mines that they have $10,000.00 on christmas day and they spent everything on family, friends and kids. At the end of the day they have no money and they have to ask for a loan from the back or a close friend. The only people that I currently buy gifts for is my mother and that is it.

    • Rafael Is Selfish

       Hopefully that’s not the lesson Kevin’s trying to teach. He doesn’t say you should be selfish like you are “The only people that I currently buy gifts for is my mother and that is it.” He means that you should be careful with what you spend. You can be responsible with money and not be a total @$$hole like you,

  • My mother put me on the right path. Here are the two words that describe me. Eagle Scout. I am 22 years old, I have an associates degree, I am currently debt free until I purchase my first home, I have a large savings account, and I am on a very firm budget. I find it very easy to control my money. It’s not that difficult, and I wish everyone could see it that way. 

    – Jordan Clement