Holiday Budgeting Tips

Holiday Budgeting Tips  

With the holiday season fast approaching we are bound to hear much about holiday spending. Holiday spending can put a dint into the most prudent of consumers. From gifts, food, drinks, decorations, wrapping, new holiday wear and road trips to see family the list of expenses can seem endless. Spend too much and you could suffer from a spending hangover, in the form of debt, that will last months or maybe even years.

On average we spend about $1,800 each during the holidays and 78 per cent of Canadians plan to cover that cost using credit cards. On average it takes a family six months to clear credit card debt accrued during Christmas. So how best to plan for the upcoming holiday season? Budget. And not just any budget, a budget based on your OWN unique needs, fixed expenses, debt repayment, child care expenses and variable expenses. 

Here to help you with your holiday budget, we at Continuum II have put together a list of tips to help you prepare for seasonal spending. In applying these tips to your financial plan this holiday season you could increase savings, repay and reduce debt, prevent impulse spending, distinguish between a need and a want, and identify expenses that can be reduced.

Note: What everyone can spend on gifts during the holidays is different, so building a unique budget to your own lifestyle is key. 

Tip 1. Make a list of all the people you wish to give a gift to. Divide that list into 3, your primary relationships, secondary and service providers. Then allocate a dollar amount, base on your budget, to each person.

Tip 2. Now that you know how much you can afford to spend on gifts, why not pre-fund your gift budget? The best way to plan for gifts is to set up a sinking fund-that is a special bank account to which you contribute monthly the preset % of your income you can afford and wish to devote to gifts.

Tip 3. Remember, gift giving is not a competitive sport. If your budget is tight, you may wish to provide some on your list with a hand written card, or a unique tree ornament. 

Tip 4. Setting and discussing spending limits with family members, beforehand, provides everyone with the opportunity to weigh in and be clear about their own budgets

Fun tip: Try something different. Many families “draw” names and only buy for the person who’s name is drawn.  This way, each family member receives one nice gift.

Needless to say, going into debt to celebrate the holidays is a poor financial decision.  Best to put the charge cards away unless you are confident you can pay off the balance in full come January.

If you need more help building your holiday budget, call your Continuum II advisor today.