With holiday season in full swing, many Canadians are out rushing to stores to purchase the perfect gifts for their loved ones. Whether you are shopping well in advance or plan on doing some last-minute shopping, having a budget and sticking to it will keep you from feeling the holiday blues.
In Canada, 2019 holiday spending is up by 1.9% to an average of $1,593 (that’s a lot of gifts)! Surprisingly 84% of Canadians set a budget for their holiday shopping but 66% go over their budget. If you think about it, that means that 82% of Canadians either don’t have a budget or go over their budget. A common culprit of going over your budget is online shopping which is up 4% from last year, with 41% of Canadians planning to do their holiday shopping online. This makes sense as Amazon Prime memberships are up 60% from last year! With easier access to purchase gifts, through websites, apps, and many retailers offering free shipping its easy to get carried away with spending.
Gifts are not the only expenses to consider during the holiday season, food, travel, clothing and decorations, will also eat into your holiday budget. With all of these expenses many Canadians are using their credit cards to purchase these items, but leaving balances well into the new year can mean those gifts cost you a lot more than you intended, as most credit card carry a high interest close to 20%. Not only will credit card debt be piling up but failing to pay your credit card bills can result in damaging your credit score.
So, what can you do to stay within your budget?
Take a look at your current savings, and income. Be realistic about the gifts you would like to buy and how much you can afford to spend.
Create a list of every person you would like to give a gift too, and all upcoming expenses that you may incur as a result of the holidays. For example, dining out more frequently, decorations, vacations, new clothing for holiday parties etc.
Once you write this out, start to add spending amounts next to each item, totaling everything up at the end.
Review the list and see if you can find ways to save money. For example, lowering the amount you spend on gifts, dining out etc.
Once you have your total budget for the holidays, compare that against your income and savings. You should be able to pay off your Holiday Budget within two months. If you can’t, then perhaps you are spending too much!
Go back and see if you can reduce your budget, if not, see if you can raise some extra cash. You can do this by selling items you don’t use anymore, working overtime, or picking up a part-time job until you can pay off your holiday bills. If you have points from your travel rewards or credit cards, try to redeem them to help you stay within your budget.
Now that the budget is created, make sure you track all expenditures and cross-reference it with your budget. If you overspend on one item on your list, see if you can save some money on another.
Following these steps will help you stay within your budget, and allow you to enjoy the holidays to the fullest! From all of us at Elite Tax, have a happy and save holiday season!
See you in 2020!