How Do Holiday Expenses Play Into Debt Management?
Holidays and Christmas is a popular time of year. As friends and families gather to celebrate together there are many expenses during this time.
Is it possible to celebrate Christmas and holidays with your family and stay out of debt in January?
Managing holiday expenses is an important part of debt management because during the holidays it is very easy to overspend and end up in trouble.
Learning how to plan for the holidays and keep up your debt management plan during Christmas can help you enjoy a stress-free and happy holiday season.
How Can I Avoid a Holiday Debt Hangover?
Clients often see the holidays as a time to be less concerned with debt. Image credit – Nintendo Canada.
A happy and pleasant holiday with family can quickly become a debt nightmare in the new year if you are not careful with your planning before the holidays.
Planning a spending plan for the holidays several weeks before Christmas is the perfect time to start. Planning now can help you avoid holiday debt after Christmas.
Some tips to help you stick to your holiday budget include:
- Use Only One Credit Card Shopping: By using only one card you can keep track of your spending in an efficient manner.
If you have multiple credit cards, use the one with the lowest interest rate to save money.
- Create a Holiday Gift Buying Budget: When you plan your holiday budget you should write a list of everyone you will be buying a gift for. By knowing who you need to buy for you can plan each gift you need to buy and can estimate the budget you can have for each gift. If you know who you need to buy for, you will buy only the gifts you need.
- Make Your Gifts: Even in a material world such as ours, sometimes the best gift can be from the heart. When you look at your gift-buying list think of who would appreciate a home-made gift.
If you are a good baker you can make cookies or a Christmas treat for certain people, you can offer to help a friend with something you are talented at, or you can cook a dinner and spend the day with your Grandparents.
By making a gift from your heart you can show your true feelings and make someone feel special. Homemade gifts also help you stretch your holiday budget!
- Shopping For Your Kids: Buying your child their favorite toy or gift will keep them happy and will be less expensive than buying several different toys they are not as interested in.
Buy a gift they can play with after opening their gifts so they are occupied and happy after opening their gifts.
- Avoid a Deferred Payment Plan: While these “buy now, pay later” deals sounds good and can be tempting, they are often a debt trap.
If you do not pay in full before the grace period ends you will start paying extravagant interest charges (up to 50% or even more) that can rapidly spiral out of control.
You will likely often pay more for the item as well.
The holidays are a special time but you should be careful not to make a mountain of debt rather than pleasant memories.
How Can I Make a Plan For Holiday Spending?
The average Canadian spends about $1,800 during the holiday season. If this is out of your budget you can still have a great and fun holiday with the proper holiday spending plan. You can keep your holiday spirit but avoid costly holiday debt by planning early and carefully for the holiday season.
With the Christmas season only weeks away it is a good idea to start planning early. A good way to start planning for the holidays is discussing your gift buying budget with your family and friends.
Discuss what you feel is reasonable for your budget so your family can also plan their gifting budget.
Download TD |Bank’s Holiday Budget Tips Infographic
About 8 weeks from the holidays you should look at your financial situation and determine what you can afford for the holiday season.
Write down all of the people you want to give gifts to and budget for parties, decorations, wrapping, taxi fares, mailing expenses if you are sending gifts out of town, travel and other expenses you think of.
Planning ahead if you need to travel during the holiday season can help you save on airfare, hotel fees and dining out expenses.
Waiting until the last minute to make holiday travel plans can result in extremely high plane costs and hotels can be booked up.
Try to find a hotel that offers a free continental breakfast, and bring snacks and non-perishable foods to have ready. If you can, try to eat at a family member’s home rather than going out to a restaurant.
About one month before the start of the holidays you should start to mail out your gift packages. Don’t wait until the last minute and have to pay very expensive express shipping costs.
Start purchasing any gifts you need to purchase for people on your list. Once you have bought a gift for someone, cross their name off your list. Keep track of your expenses so you can easily stick to your gift purchasing budget. It is also best if you do not shop during peak hours.
If you are stressed or in a hurry, it can be much more difficult to make wise choices and stick to your budget.
After the holidays end you can look for sales and deals on decorations, wrapping paper, and other supplies for the holidays you can buy for next year. Develop a plan for next Christmas.
Focus on Spending Time With Family and Friends
Lastly, it is important that you focus on spending time with family and friends during this special time of year. Celebrating with family can help you keep your spirits high and help you save money.
Focus on Christmas traditions that can help you make memories and not bills. Avoiding blowing your budget and keeping your holiday finances in check is an important part of a successful long-term debt management plan.
Holiday expenses can rapidly spiral into a debt problem if you do not have a plan in place that you can follow. Avoiding a debt hangover from the holidays can help you avoid financial problems such as bankruptcy or the need to file a proposal.