It’s officially January – and while Christmas may be behind us, a local credit counsellor is advising not to be too quick to get out of that holiday spirit. Why? Because January is actually the perfect time to start planning next year’s holiday budget.
“The holidays are an expensive time of year, and while people do tend to budget, it’s often too late in the year to put aside that money,” says Susan Eisner, CEO of SolveYourDebts.com. “If you haven’t been putting aside money for the holidays every month from the start of the year, it’s highly unlikely that you will have that money just sitting around come October. You may find yourself pulling from other important places, such as an emergency fund, or worse, relying purely on credit.”
According to the Retail Council of Canada’s (RCC) 2022 Holiday Shopping Survey, Canadians planned to spend about $790 this holiday season – about the same as last year. While this number focuses on gifts, it doesn’t account for additional holiday costs such as food and decorations.
“Simply put, the more time you have to put aside the money, the less you have to put aside each month, and that makes budgeting for the holidays a lot easier,” says Eisner. “For example, if your holiday costs are $1,841 – the same as the average Canadian consumer – you would need to put aside just $150 a month for the entire year to be able to buy everything you budgeted for. When you don’t plan, you end up overspending or relying on credit cards to pay for everything.”
This January, Eisner is encouraging Atlantic Canadians to get a head start on their next holiday budget. Here are five tips to get started:
- Create a list of everyone you want to buy gifts for. There are likely many people in your life who you will want to buy gifts for. Start by writing down a list of all of these people – family, friends, co-workers, teachers, etc. This will ensure you are well prepared in advance and that you can budget accordingly for the number of gifts you will have to buy. While writing this list, also consider how much money you will need to allocate to each person.
- Determine what you can afford to spend. Like any good budget, you will need to decide upon a realistic and conservative number that you can afford to spend. Begin by recording your monthly earnings along with all your monthly expenses. Once you’ve calculated the excess money you have left over, decide from there how much you want to allocate monthly to your holiday budget. Divide your calculated figure amongst the people on your list to see your budget per person. This is a great way to understand what you can afford and will give you more incentive to stick with your budget and not go over.
- Refer to last year’s holiday budget. This is a great starting point for deciding how much money you will need this year and where you can tighten or loosen your spending. Keep track of your budget every year to become more efficient and accurate for the following year.
- Adjust your budget if needed. Budgets are not supposed to be broken, but that doesn’t mean they can’t be adjusted. Based on external factors, you may find yourself with more or less money throughout the year. You may also need to add or remove people off your gift list. If this is the case, then it’s okay to reallocate your budget and adjust it appropriately. However, always keep in mind what you can afford and always adjust your budget accordingly when changes are made in your gift spending.
- Do your research before shopping. Lastly, but most importantly, you must stick to your budget. To do this, you will want to do research prior to shopping to make sure you’re getting the most competitive prices possible. Certain stores will have sales, and sometimes buying online is the more affordable option. You may also get bulk discounts at certain locations, and since you already have your list of people in mind, you can stock up early and save big on gifts for everyone.
For more budgeting tips and tricks, visit SolveYourDebts.com.
