Friday, December 23, 2022

For many of us, the holidays quickly become a money-spending spree. Between the family get-togethers and the never-ending holiday activities, we can get a bit carried away (especially financially) and before we know it, we’re overspending and taking on debt. Not the best way to start a new year. Here are some tips on how to keep control of your finances this holiday season so you aren’t starting the new year with a financial disaster on your hands.

Create a Budget

If you haven’t done this already, create a list of all the gifts you NEED to purchase and how much you can afford to spend on each person. Give yourself a bit of wiggle room but make sure to stay within your set budget. Bring your list everywhere you go and check it often to ensure you don’t pass your limit. Don’t forget about all the other expenses that come with the holidays. There’s food, entertainment, holiday decorations, and travel costs to consider, as well. 

When you’re making your budget, make sure to cover all these expenses, in addition to your regular monthly expenses. Calculate how much you can afford to spend over the holidays and keep track of your spending to make sure you stay within your limit. By tracking your spending, you can also help yourself financially plan for the next holiday season and set some realistic boundaries for your expenditures. If at the end of the holidays there’s room left in your budget, consider putting it towards your existing savings plan or as a starting point for an emergency fund!

Be strategic with your gift giving

Consider buying the same gift for multiple people on your list, if you think it’s something they would enjoy. This enables you to take advantage of those buy-one-get-one deals, saving you time and money. You could vary gifts by choosing different colours, styles, or features. If you’re crafty, consider making your gifts. Not only does this add a personalized touch, it keeps you away from busy malls where you may be tempted to purchase things you don’t need.

Paying with your credit card is fun, until it’s not

Credit cards can be a useful tool to cover some of your holiday spending, if you’re using it correctly! It’s important to pay attention to your spending so you don’t end up wracking up a ton of high-interest debt. When creating your budget, keep in mind any existing debt you may have. If you plan to use your credit card, how much can you realistically pay off?

A good tip when buying gifts with your credit card is to consider your payment due date. Most Canadian credit cards have an interest-free grace period of about 21 days. If you know when your billing cycle ends, you can spread out your repayments by as much as 6 weeks by buying some items in one billing period and others in the next. But if you don’t think you can pay off your holiday debt before you start accumulating a ton of interest, it’s probably best to keep your credit card at home.

For all your general financial inquiries and how you can plan out your financial goals, come talk with an advisor at your closest YNCU branch!

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