Are you scrambling to get ready for the holiday season?
As kids, the holidays were full of fun experiences, excitement, and anticipation of the gifts we would receive. Once we grow up, though, the holiday season can take on a new meaning — one that often brings financial strain and stress.
However, with a bit of planning, preparation, and smart budgeting, you don’t have to let your inner Grinch come out this holiday season. Below, I’ll offer some helpful tips and budgeting advice to help ease financial stress during the holidays.
How much do Canadians spend during the holidays?
According to online publication Made in CA, the average person spends $1,593 on holiday expenses. This includes gifts, experiences, decor, entertainment, and other discretionary holiday spending.
One of the biggest mistakes I see people make is putting off holiday shopping until the last minute.
Unless you have a holiday savings or spending account that you’ve spent the rest of the year setting aside, saving your shopping until the last minute often means going into credit card debt, misusing buy-now-pay-later programs, or taking out personal loans to cover the sudden expenses.
Setting a realistic budget for yourself
A little bit of budgeting can go a long way to making your life easier. This is just as true in regards to managing your day-to-day spending as planning for the holidays.
Start by estimating your overall spending, including gifts, travel, food, and entertainment. Once you have a total in mind, break it down into categories and set specific limits for each.
For gifts, make a list of the people you’re buying for and allocate a set amount for each person. By assigning these limits ahead of time, you can avoid impulse purchases and ensure you stick to your overall budget. It will also help you begin the process of mentally selecting gifts ahead of time before the holiday season creeps up on you.
Make use of cash-back cards and programs
One of the best ways to give yourself a little bit of extra breathing and spending room during the holidays is to use cash-back programs and cards. Whether you’re using a cash-back debit card or a retail credit card that offers cash-back at select stores, you could be earning anywhere from two to five per cent back on every dollar you spend.
It may not sound like much, but it could add up to an extra $100 over the course of your holiday shopping, which is another couple of gifts you can buy without the extra stress.
Find ways to be creative
Another great way to save on holiday expenses is to find creative ways to make DIY gifts and decorations. For example, instead of buying a bunch of expensive ornaments for your tree, consider collecting pine cones and spray painting them gold and silver.
If you’re a gifted artist or crafter, consider making a personalized gift rather than buying something from a store.
How to manage holiday expenses without going into debt
One of the worst things you can do during the holidays is to go into debt to impress others with gifts that are more than you can actually afford. Not only is it financially irresponsible, but it can sour the entire mood of the holiday season and lead you to resenting the gifts and people you’re giving them to.
Here are some ways to avoid going into debt this holiday season.
Create a holiday savings account
Open up a new savings account and designate it as your holiday savings. Beginning in January, try to contribute a small amount to it every month. One of the easiest ways to do this is to set up an auto-draft from your checking account, so that a certain dollar amount is taken out with each paycheque you receive.
If you save just $10 per week, you’ll have an extra $500 by the time the holidays come around.
Start holiday shopping in January
As soon as the holidays end in January, all of the retail stores slash their prices. This is the best time to purchase lights and other decorations for the next holiday season.
During March and April when clothing stores switch from winter to spring styles, you can also save big on winter gifts like outerwear, boots, pajamas, and more. The only issue here is that you’ll need somewhere to store all of the gifts until the holidays come around.
Take advantage of Black Friday deals
Another great way to save on gifts is to take advantage of pre-holiday sales like Black Friday or Cyber Monday, where you can save a lot on all types of gifts.
Prioritize the experience over the amount spent
At the end of the day, the holidays shouldn’t be about how much money you spend. It should be about the experiences you share with your friends and family. Some of my best holiday memories are when my close friends, family and I got together, shared some good food and gave each other small $15 or $20 gifts.
Planning ahead, budgeting, and starting your holiday shopping months in advance is generally the best way to avoid undue stress. Set small monthly savings goals and try to start purchasing gifts as early as the spring or summer, so that at least half of your shopping is already done by the time the holidays come around.
