It's Your Money  

Avoid a holiday hangover

The Black Friday shopping spree is often the staring point of the annual over-spending period also known as Christmas.

Each holiday season, warnings of spending too much are issued but the consequences this year are higher than they were in the past.

With numerous interest rate increases in the past 12 months and many Canadians saddled with too much consumer debt, every dollar spent that could have instead gone towards paying down your debt is costing you more than before.

Before you start calling me Scrooge, understand that I’m not saying you shouldn’t enjoy the holidays. But what I am saying instead is that now more than ever you need to have a plan to avoid a holiday hangover.

Planning your holiday spending means not just budgeting for gifts, but also the many other expenses that come with the holiday season. Entertaining, travel, events and a myriad of other expenses also pile up during this time of year.

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:

Make 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.

Create a list for gifts — Start by deciding 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.

Say no to 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.

Buy less for your kids — This is probably the hardest tip to stick to but it’s important. Many toys 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.

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.

Be selective in holiday events — While it’s nice to try to attend every lunch, dinner and party, that 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.

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, so you 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 a nasty holiday financial hangover.  

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About the Author

Designated as a chartered investment manager and certified financial planner, Brett holds life insurance and investment licenses in B.C., Alberta and Ontario.

In addition to being the owner of Kelowna-based SPEIR Wealth Management Inc., Brett also serves as the vice-chair of the Financial Planning Standards Council of Canada’s board of directors. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations for the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FPSC board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected].

For more information or to see a database of previous columns, visit www.speirwealth.com.



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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