Make a list, check it twice

Even though the holidays take place at the same time every year, many people forget about the added expenses. This is obviously a less than ideal situation as you could end up spending without any real plan on how to pay things off.

To keep yourself on budget, create a list of who you need to get presents for. While it can be tempting to put everyone on your nice list, you may not have the funds to get a gift for everyone. Unfortunately, you may have to make the hard decision to cross some people off your list.

Doing this doesn’t make you a Scrooge. You’re just making smarter financial decisions. Trust me, your hairstylist or auto mechanic won’t care if you don’t get them a present.

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Set your own budget

Forget the PWC and Retail Council of Canada surveys. What other people plan on spending over the holidays should have no relevance to you. What you do need to do is to come up with a budget that works for you.

Some people like the idea of spending no more than a certain amount on everyone on their list. For example, $25 per person at max. Others will come up with a total number and then buy as many gifts as they can as long as it doesn’t exceed that amount. It doesn’t matter how much you spend on presents or entertainment, you just want to be able to comfortably afford them.

Start shopping early

If you haven’t started Christmas shopping yet, you don’t need to panic, but you may want to get things going as soon as you can. Generally speaking, Black Friday marks the start of the holiday shopping season. Many retailers will have plenty of items in stock and there will be hundreds of products on sale. This is the best time to buy gifts and save money.

Another thing to consider is the supply chain issues that many retailers are experiencing. Not only are ports backed up, which means products have been slow to arrive on shelves, but there are not enough parts to manufacture goods.

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Talk to your friends and family

The money talk is often taboo, but the holidays may be the perfect time to bring it up. If you’re concerned about your spending, the odds are your friends and family are too. Long ago, my immediate circle of friends decided that it wasn’t necessary to buy everyone a present. Instead, we do a Secret Santa exchange during a potluck.

When my daughter was born, I told my parents that getting a ton of presents for her wasn’t necessary. They agreed to not buy her much, but with the condition that any money I was planning on spending on them, would be put aside for my daughter’s education instead. This was a fair compromise for everyone involved.

Have a repayment plan in mind

If you’ve already budgeted for the holidays, then paying for your purchases won’t be an issue. However, if you find yourself charging more things to your credit cards at this time of year, you’re going to need a way to pay for those purchases unless you enjoy paying high interest.

It might be a good time to look at your monthly budget and see if there are any expenses you can reduce to improve your cash flow. Alternatively, you may want to turn down a few invites over the holidays to reduce your overall expenses.

Although some people will disagree, buy now, pay later services such as Afterpay, Uplift, PayBright and American Express Plan It can be great ways to manage your expenses. Yes, you’ll be paying off your expenses in installments, but many of these programs charge no or very little interest as long as you’re making your payments. So long as you’re not picking up additional debt, buy now, pay later programs can be part of a responsible holiday budget.

Use your credit cards to your advantage

When used responsibly, your credit card can be your most important tool over the holidays. Those that use a cash back credit card will get a percentage back in cash on all their purchases. If you have a rewards card, you’re earning points that can be redeemed for travel or merchandise later.

It may also be tempting to use your hard-earned points for a statement credit, gift cards or merchandise. While this will offset your overall costs, these redemptions typically offer a lower value compared to redeeming your points for travel. Regardless of what type of points you collect, you should know the value of your points so you don’t shortchange yourself.

Don’t forget what’s really important

While it’s true that many people spend more over the holidays, you shouldn’t feel obligated to do the same. Everyone's financial situation is different, so if you’ve been struggling, don’t let this time of year throw you off course. Spending quality time with your friends and family is more valuable than any gift you could buy.


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Barry Choi Moneywise Contributor

Barry Choi is a Toronto-based personal finance and travel expert who makes frequent media appearances. When he's not educating people on how to be smarter with money, he's earning and burning miles and points for luxury travel.

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