The holiday season is upon us, and your calendar is likely chock full of restaurant reservations, Secret Santa exchanges and other plans to celebrate.
For a lot of people, the festivities can send your monthly budget into a tailspin. Between presents for all your friends and family, gifts for those who host you and eating and drinking, the costs add up.
In fact, 62 per cent of millennials could rack up more than $500 in debt over the holiday season this year, according to a recent Credit Karma survey.
Even worse, 28 per cent of those who went into debt last year during the holidays are still trying to pay it off.
Some respondents said it was gifts that send them into the red, while others said travelling. But one thing is abundantly clear: Canadians are stressed about holiday spending.
Forty eight per cent of respondents said they feel “immense personal stress” leading up to and throughout the holidays. Twenty two per cent said they wish they could instead use this money to save for a home or car.
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In fact, a similar survey by PC Financial found that money stress has led nearly 50 per cent of respondents to skimp out on holiday dinner.
“Often times, people incorrectly feel like the amount they spend on their loved ones is a reflection of how much they love them, which can result in overspending,” said Monisha Sharma, head of business development at Credit Karma Canada.
“If you’re still shopping for gifts, you should consider making a budget — and stick to it. This will help you feel more comfortable about your spending since you’ll have a clear understanding of what you can afford.”
The trick to avoid overspending is to plan ahead, said finance and travel expert Barry Choi.
“This might be late for people now, but I think you should always build gifts into your monthly budget regardless (of the month),” he said.
“There’s nothing wrong with spending more at Christmas, but if you know you’d like to spend that money, you might need a separate Christmas budget account.”
Choi recommends setting aside $100 or $200 each month, beginning in January. That way, when December rolls around, you have a lump sum ready to go.
This is a great tip to take with you into the new year, but it won’t necessarily help you in the weeks ahead.
Here, Choi and money expert Jessica Moorhouse offer some sage advice for sticking to your budget as the holidays near.
Learn to say no
A big problem with the holidays is people feeling obligated to say yes to every invite that comes your way.
“You want to say yes to (every invite), but if you don’t have the budget to go there, you should reconsider,” said Choi.
“Between spending money on gas or transportation, a housewarming gift and gifts in general? That’s definitely going to add up.”
Spending more than you have during the holidays misses the point of the season anyway, said Moorhouse.
“No one likes a January financial hangover, so let’s stop this cycle of consumerism during the holidays and remind ourselves of what the holidays are really about — and what we can actually afford,” she said.
Instead, recommend to friends and family that you spend time together. Moorhouse and her family buy one gift each for an exchange, and “spend more time eating, drinking, talking, doing puzzles together, watching movies and spending quality time together.”
Ask yourself: who actually needs a gift?
It might be awkward, but sometimes it can be helpful to think critically about who in your life is so important that you would like to give them a gift.
“If you’ve got close co-workers you hang out with outside of work, definitely get them a gift,” said Choi. “But someone you just talk to in the office, do they really need a gift?”
Choi said “social pressure” is to blame for people feeling obligated to give presents to acquaintances, like your dentist or your hair stylist.
Even for those people with whom you have a long-standing gift exchange tradition, this might be the year that you both revisit the ritual.
“If you have a lot of one-on-one friends that you typically exchange gifts with, I would say do something crazy and actually talk to them about whether they themselves want to exchange gifts or if they are just continuing with this annual ritual out of obligation,” said Moorhouse.
“You may find that they would be totally fine exchanging cards instead, or just spending time with you over coffee or a nice cup of mulled wine.”
Be honest about your financial situation
For Moorhouse, the key to sticking to your budget is in telling people close to you about your desire to save money. For the most part, they’ll probably understand.
“I know (it’s) easier said than done, and I’m probably one of the few people out there who likes to talk about money openly, but once you do, it will lift a major burden,” she said.
“It’s how my family shifted from buying a ton of gifts for everyone to doing a gift exchange.”
Both Choi and Moorhouse recommend gift exchanges as a fun way to give (and receive!) presents while spending a small amount of money.
“Set a limit of $20 (or $30) per gift per person,” Choi said.
Moorhouse recommends ditching the physical gift for some kind of experience.
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“Honestly, what I hear from most people is they don’t need anymore stuff. They only buy gifts because they feel they have to,” she said.
“Instead, when you can, talk to that person and see if instead of gifts you can exchange cards or better yet do an activity together like coffee, a drink, lunch, going to a movie, going to a Christmas market, (or something else).