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household finances

Holiday expenses can often pack a wallop to the wallet, but celebrating the season shouldn't leave you drowning in debt.

Personal finance experts share tips for holiday budgeting and spending to keep you out of the red.

1. Set a goal

Stewart Langille is director of marketing for, where individuals can manage personal finances online, track spending and gain tips to help them save. is slated to launch in Canada later this year.

Mr. Langille said the first thing people need to understand is where they're spending their money, and setting up a budget is the first goal.

"I think a lot of people set up a goal one time and then they don't stick to it and they don't have a firm understanding of where their money's going," he said from San Francisco. "That's one of the most common areas where I see where people fall down is they believe they have an idea of where they're spending the money, but they really don't."

Mr. Langille said it's important to set a budget now and stick to it rather than going out shopping aimlessly and dealing with how much was spent after the fact.

"In that sense, it could be a relatively painful impact on their cash flow or on their credit card, but if they have the discipline to set a budget before they go out to the mall, then that's going to make a big difference," he said.

2. Remember all the costs over the holidays

Laurie Campbell is executive director of Credit Canada which provides money management and credit management counselling and education services.

Campbell said many people find themselves in difficulty in the New Year because they forgot about extra costs, like those for food, the extra outfit for a special occasion or decorating. "That may also make you realize that the huge amount of money that you were going to spend on gifts may need to be curbed to consider all these other costs that are going to be associated with the holidays."

3. Spend within your means

It's up to every individual to determine how much they can afford to shell out come holiday time. But Mr. Langille said it's crucial to look at how it will affect your spending in other areas, and being disciplined to know you'll have to scale back either before or after the holiday depending on how big you go for the festive season.

"If they're going to go out and spend $1,000 and they only make $3,000 a month, then in the months leading or the months following, then their other discretionary income is going to get reduced," he said.

Mr. Campbell said it's important not to hit the New Year with a huge debt. You should be looking at being able to pay it off quickly, ideally within the first two months. Hopefully, individuals will be able to stay within their means by having saved money already." The truth of the matter is, there's really no holiday and there's really no wondrous event if you're going into the New Year stressed out about financial difficulties because of the holidays," she said.

4. Done shopping? Then call it a wrap

Mr. Campbell said one the reasons people get themselves into some difficulty is because they don't recognize that once their shopping is done they have to leave the store." It's so important that they don't get trapped into one little gift for Aunt Suzie, one more little gift for my daughter, one more little gift for myself, and that's where the budget really falls apart," she said.

"You regret it later because all the stuff you're buying you really don't need, you don't necessarily use, you've really just got caught up in the emotion of the season."

5. Value memories over material possessions

Quick: Think about what gifts you received when you were nine, 10, 11 or 12. Chances are you cannot remember them, Mr. Campbell said. But what you do recall are the memories, events, special foods and activities shared with friends and family, she noted.

"As a parent and as a family, creating long-lasting, positive memories is going to go a lot further than buying the most expensive toy or electronic item out there," Mr. Campbell said.

"This is something that can maybe ease your mind as you go into the holiday season realizing that you can't afford to get everything for everyone."