With the cost of holiday gifts, parties and travel, many people find themselves in debt over the holiday season. But with a little planning, you can avoid holiday debt.
1. Set a budget for your holiday spending
Set a budget that you can afford and stick to it. It should include all the things you’ll spend money on over the holidays, such as gifts, cards, decorations, parties and food. Use this holiday budget worksheet as a guide.
2. Save before you shop
Save a little bit for the holidays each month. That way you’ll be spending cash you already have on hand. If you choose to use a credit card, you’ll have the cash to pay it off right away.
3. Make a list
If you shop with a list, you’ll be far less likely to buy on impulse. That means you’ll also be more likely to stick to your budget.
Before you shop:
- List the people you plan to buy gifts for.
- Think about their interests and the kind of gifts they would like.
- Estimate the cost of each item on your list. You may be able to do some comparison shopping online.
- Check that the cost of each gift fits your budget.
4. Pay cash, or pay credit cards in full
Paying cash for everything can be a way to help you stick to your budget. If you choose to use a credit card, pay it off in full and on time to avoid interest charges.
How much does that gift really cost? To learn more about the risks of holiday debt, read Luc’s story.
5. Keep track of what you spend
Keep a record of what you've spent and what you’ve bought, and compare it to the list you created. If you start shopping early, it can be easy to lose track over several weeks or months. Try putting all your shopping receipts in a single envelope. As you shop, add the amount of each new purchase onto your total.
6. Shop early
If you shop at the last minute, stores may be out of the items on your list, and you may be more likely to buy on impulse. You’ll also have less time to shop around for the best deal. If you shop online, you’ll pay higher shipping fees if you wait until the last minute to order.
7. Look for sales and other discounts throughout the year
Watch for sales throughout the year to spread out the cost of gift-giving. Sign up for e-mail or even text-message promotions from the retailers you are most likely to buy from. Also sign up for or check the balances you have on rewards programs offered by debit and credit cards. You may be able to get a free gift or a discount. If you shop throughout the year, resist the temptation to buy additional gifts during the holidays that aren’t on your list.
8. Look for ways to reduce your travel costs
There are two ways you can try to cut your travel costs for the holiday season:
- Buy your tickets early, at least by October.
- Wait until the last minute. Some travel websites have last-minute sections that offer huge discounts on travel packages. You must be flexible on your dates, though, and there’s a chance no travel packages will be available.
Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca