The holiday shopping season is in full swing and so should your Christmas budget. According to the RBC 2018 Holiday Spending & Savings Insights Poll, four in ten Canadians (42%) admit they overspent on their budgets – spending on average $530 beyond what they planned.
To avoid the adverse effects of your holiday shopping in January, get ahead of it and set a Christmas budget to prevent overspending.
Christmas is a fantastic time of year; decorations, entertaining, buying gifts for friends and family – who doesn’t love Christmas? However, the real question to ask is ‘Who loves debt’?
Here are some Christmas budgeting tips to avoid overspending this holiday season.
1. Set A Budget
Sit down with the key decision makers (Partner, spouse, etc.) and decide how much you will be spending. Think about how much you have spent in previous years and where you will like to increase or decrease.
Take into consideration all of the areas of the Holiday season, not just gifts. These include:
- Holiday cards
- Family photos
- New decorations
- Santa experiences
- Charitable giving
Ensure you add these items to your Christmas budget.
2. Limit Self-Gifting
One of the most significant holiday trends which always result in overspending is ‘self-gifting’ – people treating themselves to presents when they are out shopping for others. Avoid buying gifts for yourself when you are out shopping. It is not about you it is about spreading the Christmas cheer with others.
3. Create a List of Who to Buy Gifts For
Make a list of who you are buying for and write down how much you are spending on each, including taxes. While most of the gift giving will go to your immediate family, think of other gifts that pop up along the way, including teachers, neighbours, secretary, dog walker and grandparents, etc.
Once your list is complete, start thinking about if you can afford to buy gifts for everyone on your list. While it is fun to buy gifts, there are so many ways to spread holiday cheer without an actual tangible gift.
4. Create a Shopping Plan
Now that you know who to buy for and how much to spend on each, it is the time to strategize about the shopping plan. Start by writing down a few gift ideas for each person and how much you plan on spending.
As you think through what gifts to buy, think about how you will be purchasing (online/in stores) and where. As you identify where you can source these gifts from, you can start looking for deals, including:
- Friends and Family weekends
- Black Friday
- Free shipping
There are hundreds of deals to be had leading up to the holidays, and the sooner you know what gifts to buy and where, the earlier you can take advantage of the deals and save money.
5. Track Spending
One key component to ensuring you stay within your holiday budget is to track your spending daily. Practicing due diligence during the holiday season is essential. Every penny counts because of the extra shopping, so buying the daily latte can add up and affect the money you have available to spend.
While there are several free apps available, you don’t need anything fancy to accomplish this. Use a simple piece of paper and pen and at the end of each day, record the items you spent that day and compare it regularly with the budget you created.
6. Alternative ways to spread Christmas Cheer
While it is nice to buy gifts, we all know that there are several other easy and frugal ways to spread the Christmas cheer without breaking the bank. Below are some examples of how you can experience the holidays while keeping your wallet in check:
- Be a savvy shopper. Not only look for deals but find stores that have a selection of gifts at a very reasonable price. For example, head to the Dollar Store and find a holiday-themed mug and fill it with treats for teachers, assistants or others.
- Bake extra Christmas cookies to make a special treat platter.
- Gather the kids together and create simple Christmas crafts, cards or ornaments.
- Replace a tangible gift with time. Think about experiences you could do with loved ones where spending time together is the gift – the real reward.
It is essential to be realistic about what you can afford this Christmas and not be influenced by media on how you should experience Christmas. It is tough when magazines, social and TV have beautiful photos of how your house should look or what the ‘perfect’ gifts are for your friends and family. To overcome the pressures, think about what is realistic with your budget, what is important at Christmas and how overspending on your budget will affect you in the New Year.