Can we really afford to 'treat ourselves' this December without blowing our budget?

Every year, I brace myself for my end-of-year credit card bills. It's not that I spend wildly – I'm usually prudent – but the combination of holiday travel and year-end expenses always tends to add up.

A few years ago, I booked a family trip to Taiwan for six of us. The total? A whopping S$10,000 (US$7,650).

Paying that off in January was painful, to say the least.

And I know I'm not alone. Data from Visa, the digital payment firm, shows Singapore residents' spending during the December 2024 travel period hit record highs – retail spend rose 14 per cent year on year, while dining spend climbed by up to 30 per cent.

It won't be surprising if the same happens this year-end, and it's easy to see why. The year is winding down, work deadlines are piling up, travel plans are taking shape, and we're juggling social gatherings, office parties and family obligations on top of managing the kids during the school holidays.

Add to that the festive lights, year-end bonuses, mall speakers looping Christmas playlists, and sales banners everywhere – and the mood shifts quickly from "self-control" to "I deserve this".

Psychologists show that when our mental resources are taxed, we have less bandwidth for discipline – and researchers like Benoit Monin have found that after doing something "good", people may feel licensed to indulge, making self-control more fragile.

That's why the end of the year is often one of the most financially dangerous periods – after 11.11 sales, December is the perfect month to overspend.

Saying yes to a pricier-than-usual treat can feel harmless in the moment. But when that impulse is repeatedly indulged over weeks of festive gatherings and promotions, it can quietly undo months of financial progress.

So how do we enjoy the holidays without waking up in January with a headache – not from champagne, but from our bank balance?

THE "TREAT YOURSELF" TRAP WE ALL FALL FOR  

We often justify purchases by telling ourselves: "I've worked hard, so I deserve this". For the past few years, I’ve been taking my children on holidays to enjoy new experiences abroad together before another hectic new work year arrives.

I've noticed this mindset in myself, too, and it feels intuitively right. You've worked, hustled, sacrificed sleep, met deadlines, and dealt with difficult clients or colleagues. Why not treat yourself to something nice?

But here's the twist: Behavioural economists have long observed that when we work hard, we don't just crave a reward – we inflate the reward we think we deserve. The tougher our year feels, the more our brain exaggerates what counts as a "reasonable" treat, even when it doesn't make financial sense.

This is why a S$10 coffee feels like a treat during a normal month, but in December, even a S$300 spa session can feel justified.

Psychologists call this moral licensing – when we do something "good" (working overtime, saving money, or going to the gym every week), we feel entitled to do something "bad" (overspending or overeating) later.

One indulgence easily leads to another, especially during the year-end season, and before we know it, what began as a single reward quickly snowballs into hundreds – or thousands – of dollars in unplanned spending, sometimes more than an entire month's pay cheque.  

With the rise of "buy now, pay later" services, it's easier than ever to stack up these purchases on credit and walk into the new year carrying festive-season debt.  

What's more, when we're tired or emotionally drained, our self-restraint weakens.

One treat won't break us, but letting it become a habit will, because the more often we indulge, the faster our baseline expectations rise.

Meanwhile, our income isn't rising to match. That widening gap is where long-term financial derailment begins. 

HOW TO TREAT YOURSELF WITHOUT REGRET  

You can treat yourself – just don't surprise yourself.

Life is not meant to be a continuous cycle of saving and restricting oneself. But it shouldn't be a cycle of reckless indulgence that ultimately harms your future self. 

Of course, not all treats look the same for everyone. For families already stretched by the cost of living, "treating yourself" may simply mean carving out rest or small, meaningful moments of joy rather than spending more.

Before December begins, I draw up a festive budget that includes travel, gifts, parties and an allowance for personal treats.

Allocating the budget first means I know exactly what I can spend, and can choose treats that genuinely enrich my life rather than simply drain my bank account.

When I truly want something, I give myself 24 hours before buying. I ask: Will this still matter in two weeks? If the answer is yes, I go for it. If not, I've just avoided a regret purchase.

Remember: The joy should come from the experience, not from the adrenaline of acting on impulse. Planning a treat can be even more special because part of the joy comes from anticipating it.

I've also learned to manage my December spending with a "one big, three small" rule, something I read about on several personal finance blogs a few years ago that has worked well for me.

This is where I plan one big and meaningful indulgence for December – usually a family holiday such as the Taiwan trip I mentioned earlier – and add three smaller, low-cost treats like a massage, a fine-dining meal, or a book.  

This approach keeps the month from becoming a series of mindless micro-splurges while keeping me happy as I treat myself.    

KNOW YOUR FINANCIAL PRIORITIES 

It's easy to lose sight of our future needs when we're caught up in the emotions of in-the-moment spending.

So whether you’re saving for a home, investing, or building a six-month emergency fund, remind yourself: Future me is the person I'm treating.

This simple shift reframes discipline as self-care, helping you resist the urge to give in to impulse spending or "limited-time" offers – from 11.11 to the upcoming Black Friday sales – designed to create a sense of urgency.

By recognising the psychological traps that tend to lead us to overspend, we can be more mindful of our indulgences and enjoy the festive season without derailing our long-term finances.

Don't let your December happiness turn into January regret. Give yourself permission to enjoy, but also the wisdom to choose what's truly worth enjoying.

Dawn Cher, also known as SG Budget Babe, is the author of Take Back Control of Your Money. She has been running a popular blog on personal finance for the last 10 years.