The holiday season is a time for celebration, but it can also lead to increased expenses. For many Canadians already managing credit card debt, this time of year can be especially challenging. A recent Equifax Canada survey found that 60% of consumers plan to spend less on gifts due to inflation, while 41% will limit their holiday spending because of existing debt.
Spending habits vary by age, with nearly 25% of younger adults (ages 18-34) expecting to increase their spending, compared to just 4% of those 55 and older. While cutting back can be tough, it’s a smart way to avoid financial stress in the new year.
Tips for Managing Holiday Finances
Stick to Your Debt Repayment Plan: Continue making payments on your debts to avoid added stress in January. Create a realistic budget that includes all essential expenses that include your debt repayments.
Plan Your Shopping List: Make a detailed list for gifts and meals and set specific budgets for each recipient to help you stick to your spending limits.
Use Gift Cards and Rewards: Look for any unused gift cards or rewards points you can redeem to ease your holiday spending.
Consider a Cash-Only Approach: Limit yourself to cash for holiday shopping. We spend about 15% more when we pay through credit or debit due to psychological factors at play. When you have cash in hand, you can’t accidentally overspend and you’re forced to stick to your budget. Allocate a specific amount for each person, and once it’s gone, stop spending.
Involve Your Loved Ones: Discuss budgets with family and friends to share costs for meals and gifts, making the season easier for everyone. Sometimes a gift exchange or potluck can be more cost-effective options.
Avoid Additional Debt: Steer clear of “buy now, pay later” offers that could worsen your financial situation.
Save Year-Round: The right time to prepare for the holidays is, oddly enough, right after the holidays. Set aside a small amount monthly throughout the year for holiday expenses to ease the financial burden when the season arrives.
Remember What’s Important: Many of us can fall into the emotional trap of believing the dollar value of our gift is representative of our love for the person. The reality is that our loved ones would be devastated if they learned you went into debt and risked your financial well-being in their name. Your loved ones care about your well-being. Something that can be considered is that some of the most treasured gifts are handmade or acts of service. The real value is time spent together and creating memories.
By planning ahead and sticking to a budget, you can enjoy a festive season without the stress of debt lingering into the new year. Click below for a Holiday Spending Worksheet that you can use to help you stay on track this season.
This article was used with permission from MindBeacon.