Avoid a Holiday Hangover
The holiday season is upon us and this means that many Canadians will end up spending more money over the next month than they normally do. Presents for loved ones, travel to see family, time off work and special events all add up and take a real toll on your wallet or credit card.
Canadian consumer debt is already at extreme levels and every dollar spent that could have instead gone towards paying down your debt will cost you for the rest of your life.
Now I am not saying that you can’t enjoy the holidays at all, but you do need to have a plan to avoid a holiday hangover in the New Year.
Planning your holiday spending means not just budgeting for gifts but also the many other expenses that come with the holiday season. To start, you need to be realistic with what you can afford and understand that you can’t afford to do everything. Once you’ve settled on an amount, here are a few steps you can take to stay on track:
1. Create a budget – Decide how much money you want to allocate to gifts, travel, entertainment and meals out. Once this budget has been created, stick to it.
2. Build a gift list – Instead of walking into the mall without a plan, write down who you are planning to buy a gift for and then spend some time thinking of ideas of what that person would like. It’s not the price of the gift that counts for most people but instead the meaningfulness. Some extra time spent thinking up a great idea could keep you from overspending.
3. No impulsive buys – If you haven’t planned to buy it on your list, do you really need it? Even if it’s a “great deal”, there is no problem passing on it. If you’re not 100 per cent sure, sleep on it and go back the next day to make the purchase if you still think you should.
4. Fewer toys for your kids – This is probably the hardest tip to stick to but it’s important. Many toys that are purchased each December quickly end up in the back of a closet or the bottom of a toy chest. Plus, many children are going to get gifts from grandparents and other family members on top of what you buy for them. When the excitement of Christmas morning is over, they really won’t notice if they ended up with five new toys or 10.
5. Don’t cave to peer pressure – Most commonly found at work, peer pressure can cause many to spend far more than they planned. If you have 25 co-workers, there is no reason why you should be buying a gift for each one. If everyone else at the office does and you don’t want to be the sole “cheapskate”, consider making something at home that is personalized with meaning.
6. Be selective in holiday events – While it’s nice to try and attend every lunch, dinner and party, doing so may not fit into your budget. Consider if you’ll be seeing the same group of friends at more than one event and pick which one you’d like to attend the most. It’s not just the cost of the food but also things like babysitters, taxi rides home and gifts for the host that pile up.
7. Plan now for next year – Once the holiday season is over, consider setting up a holiday fund for next year as one of your New Year’s resolutions. By putting a little bit aside each paycheque throughout the year, your budget won’t have the massive financial hit when the holidays arrive.
The holidays are a celebration and you can and should enjoy quality with family and friends. But a little bit of planning can go along way to ensure that you can do all of that without starting next year with an ugly financial hangover.