Here are 10 practical tips to help you keep your holiday spending in check.
- Plan your spending and stick to it. Don’t buy on impulse. Make a list of everyone you will be buying gifts for and estimate how much you want to spend on each person. Include the smaller gifts you plan to give to teachers or the mailman. Remember: Even a great item on sale is not a bargain if you don’t have the cash to pay for it.
- If money is tight, rethink who is on your gift list. This may sound harsh, but when saving money is an issue, you can’t afford to give gifts to everyone you know. For people you don’t know well, just send a card with holiday greetings.
- Try more creative gift ideas. Good will does not always need to be store-bought. If you have a skill or a hobby, use it. Make a photo album. Bake some cookies. If you have customers, give them discount coupons.
- Shop early in the season. Shopping at the last minute can put extra pressure on you to spend more than you planned, just to get it done.
- Consider shopping online. Some people find it helps them stick to their budget because they’re not out in the stores where their impulses could take over. If you shop eBay, just remember to start early enough to allow for shipping time. Bid your budget price and don't get into a bidding war. If someone outbids you, just bid on something else within your price range.
- Keep track of what you spend. Write everything down. That way you’ll know what you are spending as you go. And when the bills do start to arrive, you won’t have any surprises.
- Take advantage of free gift wrapping. It will save you time. And, you’ll save the cost of buying wrapping paper, bows, and tape.
- Find a way to increase your income. During the holidays there are lots of ways to make a little extra money. Many stores hire part-time workers for the holidays. Use the money you make to finance your holiday purchases.
- Use your credit cards – but only spend what you can pay for in the next 30 days. You may get some rewards and discounts. Store cards may give you discounts of 10, 15 or even 20 percent on your purchases. Just remember, they also come with a very high interest rate. So don’t spend more than you can pay off by the due date. If you do get into a pinch and can't pay them off right away, then transfer your balance to your lower-rate credit card before any interest is added to the higher-rate one.
- Ask for a better deal from your credit card company. Ask for zero percent interest for purchases made in the next 30 days, or extra rewards. It can’t hurt to ask. Banks will often be willing to strike a deal with you if you are a good customer.
- Start saving for next year. Put a small amount of money aside regularly throughout the year so you can pay in cash next holiday season.
Tip: Be careful about applying for new credit cards at this time of year. It will likely lower your credit score. This is not a good idea if you're planning to get a mortgage or other large loan soon. And you’ll have a much happier New Year if you avoid extra debt from the holidays.
What will your holiday debt cost this year? If you charged $1,000 for your holiday gifts and can only make minimum payments of 2 percent, it could take you almost eight years to pay off your debt. And, if the interest rate on your card is 18 percent, you’ll pay more than $850 in interest. That’s on top of repaying the $1,000 you borrowed! Calculate now how long it will take to pay off your holiday credit card debt.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.