Sheila Cooper Mortgage Broker in Brandon, MB
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  • October 6, 2021
  • Sheila Cooper
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Budgeting for the holidays now may sound like a chore, but it is key to avoiding financial stress in January. Here is a guide to plan for the holiday season.

Build your budget
Having no budget provides the impression of no limits – which can lead straight to debt. A budget will help keep the joy of the holidays lasting into the new year.

The first step is, determine how much you can truly afford to spend. Your holiday budget should be kept within two to five per cent of your annual income.  Don’t forget to take your current financial situation into consideration.

Also, the more detail when building your budget, the better. Make a list of all your expenses – not just gifts. Don’t forget decorations, food and travel – and record the appropriate amount for each item.

This can give you a feeling of guilt free spending when you stay within your budget.

Living in a material world
Today more than ever, gift values are equated with love. Also, there is a bigger desire to keep up with the Joneses. Retailers and advertising only reinforce this.  It is important to remember the holidays aren’t about the size or number of presents under the tree.

Sit down with your immediate family and discuss what you’d like to get out of the holidays. This can help in determining how the budget will be spent. Perhaps everyone gets one or two special gifts, and the balance of the budget is put towards a few special family adventures.

If you have group event or a large family, consider each person being a Secret Santa for one other person, not the entire group.
Impulse buying
When shopping, it can be tempting to buy more extravagant gifts – the stores are exceptionally good at marketing during the holidays!

Before you purchase the more expensive item, rather than the item on your list, pause and ask yourself, where am I going to get the money for this? It will need to come from another part of your budget. Keep all your receipts and track your spending to ensure you stay within your budget.

Do you run to the mall on Christmas Eve and grab the first items you see and spend way more than you planned? If this rings a bell, try shopping off-season. With time on your side, you can also look for the perfect gift and wait for the sales.

Plastic or paper
When it comes to paying for gifts, some people like cash; others prefer plastic. Cash is tangible so it can be easier to set limits.  Credit cards are fine if they are treated as credit and not ‘extra money’. Regardless of your payment preference, track your spending, and if you are staying within your budget you won’t have the stress of coming up with the funds to pay off the bills.

The New Year
If you haven’t saved in advance for holiday expenses, the credit card statement will inevitably arrive in January. Paying the balance off in full as quickly as possible is the best thing you can do. With interested rates between 15 and 19 per cent, your debt can double in four years’ time if you carry a balance.

Simply cutting back on discretionary spending for a few months – making your own coffee, packing your lunch, and reducing entertainment can contribute to paying off your debt sooner.

For the upcoming holiday season, focus on what can be given that doesn’t have any cost and yet is the most valuable – spending quality time with family and friends.  Create new traditions and experiences and remember that sharing an evening of laughter together is a memory that will last longer than any purchased gift.

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