HOLIDAY SPENDING DILEMMAS: How to make holiday budget miracles really happen

The joy of the holiday season can nonetheless bring all sorts of mayhem to your financial well-being. As your generosity swells, so can your credit card debt. We think that facing the danger head-on is key to a stress-free holiday budget.

Indeed, the average Canadian likes to spend substantially come holiday time. According to a survey by Leger for the Retail Council of Canada, the national average that Canadians are planning to spend on holiday shopping is $675. Maritimers spend the most at $819 and Quebecers the least at $458.

What is most alarming, though, is that the vast majority of Canadians do not have a strict budget when making their holiday purchases. In BC, only 18 per cent say they have a “very firm budget”. In Ontario, only 17 per cent. This can quickly lead to overspending.

It also begs the question: does your regular monthly budget have an extra $1000 lying around? Probably not.

In light of these findings, we think that most Canadians will probably have to deal with some form of spending dilemma. What to buy? When to start? Am I too late? Should I just go the store and wander around? There are many holiday spending struggles. Here are few that we follow up with a possible way out, so that you don’t send your credit card debt into outer space.

Holiday Spending Dilemma #1: You’ve been doing well with your household budget. You’re reining in your wants, paying down your credit cards and striving to become debt-free. This is all very exciting.

But now, as you reach mid-November, you realize that December is going to throw a wrench in the works. Your budget doesn’t include all the holiday gift buying that awaits you, let alone the other social activities that cost you money.

Holiday Spending Solution #1. A holiday budget is a definite necessity for surviving the additional expenses of the season. A crucial lesson to learn is that your budget is a living, breathing document that changes and adapts with you, all the time.

With the holidays just weeks away, the best thing to do is to try to rejig your cash flow by cutting personal expenses and resetting your expectations. There is no doubt that this can be a tough time of year for your finances. Once you find an affordable holiday spending amount, try your best to work with it. If you must use your credit card, make sure you’re able to pay the balance in a month or two. Remember: no one wants a gift you can’t afford.

Many sites offer great holiday budget advice. Here’s a good post from Credit Canada.

Also remember that credit card debt is the real danger during gift buying season. Do everything you can to avoid it. For instance: keep this year’s holiday receipts and tally up the grand total once all the dust has settled. Divide your total by twelve and include this amount in your 2019 monthly budget. Pouf! A holiday budget miracle.

Holiday Spending Dilemma #2: Aren’t the holidays the one time of the year when you shouldn’t worry about sticking to a budget? Generosity is what the holiday spirit is all about, right? Treating the people you love and making them feel all fuzzy inside? Budgeting for this may seem like you’re bursting that bubble and turning the magic of Christmas into a sad (and dull!) Excel spreadsheet.

This is surely one of the trickier holiday spending dilemmas. It’s easy to get carried away with the spirit of giving without thinking about what you can actually afford. This leads you from unpreparedness (not having a defined budget) to going on a shopping spree, albeit for other people.

Holiday Spending Solution #2. You can still revel in holiday cheer while sticking to a budget. An Excel spreadsheet is definitely not sad! It’s the first step towards organizing your holiday spending.

If you are uneasy with the program, know that you don’t have to be a tech whizz to reap its organizational rewards. All you have to do is create some columns (the amount you want to spend, gift ideas and the actual cost) for as many people (rows) as you want to buy for. Just click the AutoSum button at the bottom to calculate your totals. You can also use this online budget sheet. Much easier than the pencil and paper method! You can even jazz them up a bit with some neat holiday budget templates.

Keep a copy of your holiday budget saved to your desktop and a look at it several times throughout the season. Don’t forget to add other expenses associated with the holidays, like travel, going out for holiday parties and extra grocery bills.

Do you still have other holiday spending dilemmas that need addressing? Come back next week, we’ll be discussing more.

You can also connect with us on Twitter and Facebook to see what else we are talking about during Financial Literacy Month 2018 #FLM2018 #LeaveDebtBehind