Set a budget, make a list, and check it twice
Holiday spending is on a roll this year. According to a survey by the Chartered Professional Accountants of Canada, Canadians expect to spend about $555 on gifts in 2021. And according to a recent FP Canada survey, Canadians with credit card debt average $3,962 of debt entering the holiday season, with that number expected to rise to $4,776 before 2022 kicks off. Younger Canadians (ages 18-34) expect to add $1,274 in credit card debt during the holiday season. If those numbers are casting a shadow over your holidays, here are a few tips on keeping holiday spending under control.
* Start with an overall limit. Set a total dollar amount for holiday gifts, and then make a budget to ration it out per person. Not everyone you know needs a really expensive gift. Take your list with you as you head out the door, so you know what your objective is. Research the best prices and deals (online or even print flyers), match your wants to your resources, then go and get it. Use price-matching offers, coupons, loyalty points, and so on wherever you can.
* Lock away your credit cards. With high borrowing limits offered to anyone and everyone, and usurious interest rates, irresponsible use of credit cards is probably the fastest way to derail your spending plans. Put a limit on your credit card balance and use the card only to the extent that you can pay off that balance next month.
Use debit or cash up to the amount you’ve planned to spend. Avoid the “overdraft” trap that banks push – that’s simply a cash loan with an obscenely high interest rate. And the meter starts ticking as soon as you stray into “overdraft” territory.
* Avoid impulse purchases! Stick to your plan and your list. All that junk in the long and winding checkout lane is designed to add to your bill with no real benefit to you. Impulse spending is the most common self-inflicted money crime, especially when used with credit cards.
* Set up a spending savings account. Once you’ve got a working budget, set up a “sinking fund” to save for gift purchases throughout the year. The easiest way is to set aside some manageable fixed amount from every paycheque. Make it an automatic transfer from your bank account. And do it consistently. Done regularly, setting aside even $25 or $50 per week can really add up over time. Then set up a gift list early in the year and make purchases through the year when pricing may be better. You’ll also avoid the stress of trying to do all your holiday shopping in the week before Christmas!
Setting a budget for the holiday season, saving for it throughout the year, and sticking to your objective, is really the only way to cure seasonal spending disorder.
