The Cost of Christmas Goes Up - Investors Understand Finances on their Own Terms

I saw an interesting article last week relating to the costs associated with the holiday season. We all know the traditional twelve days of Christmas song. Well each year, economists calculate just how much all the items discussed in that song would cost if you were to buy them, to serve as a sort of measuring stick to compare one year to another.

And just how much would the twelve days of Christmas cost this year? Economists calculated that all the items would cost $18,920.59, up 3.1% from 2005. Here is the full list of results from the last two years:

Item	2005	2006	% change
One partridge	$15	$15	flat
Pear tree	$89.99	$129.99	44.40%
Two turtle doves	$40	$40	flat
Three French hens	$45	$45	flat
Four calling birds	$399.96	$479.96	20.00%
Five gold rings	$325	$325	flat
Six geese a-laying	$300	$300	flat
Seven swans a-swimming	$4,200	$4,200	flat
Eight maids a-milking	$41.20	$41.20	flat
Nine ladies dancing	$4,576.14	$4,759.19	4.00%
10 lords a-leaping	$4,039.08	$4,160.25	3.00%
11 pipers piping	$2,053.20	$2,124	3.40%
12 drummers drumming	$2,224.30	$2,301	3.40%
Total Christmas Price Index	$18,348.87	$18,920.59	3.10%

I thought this idea was pretty interesting, because it puts the concept of inflation into terms that the general public can understand and makes it interesting to a wider audience.

Aside from the required business classes many of us took in high school, I think itï¿½s safe to assume that while everyone needs to be concerned about their finances, few have formal or substantial training in this area. Intimidated by terms like inflation and semi-annual compounded interest, many people enter into investments blindly, or avoid making decisions at all ï¿½ leaving their financial future to chance.

I think that this annual calculation serves as a fun reminder of how important it is that we become informed about our finances ï¿½ especially at this time of year where we might be spending a little more than usual. We need to know where our money is and make it work for us, so that we can afford the increased costs that are sure to come each year.