Do you feel financial regret when you see how much you spent on Christmas gifts on your credit card balance? If the answer is yes or maybe, you might be paying more than you can afford. Getting gifts for your loved ones can already be financially challenging in any year, and this year isn’t any easier due to COVID. Although you might want to get the best Christmas gifts for your loved ones, it’s crucial not to burn a hole in your wallet while doing so. If you’re going to enjoy Christmas shopping without feeling any guilt, keep reading our blog post!
What are some of the challenges you might face during the holidays?
You might find yourself spending more than expected during holiday shopping because of the ease of ‘clicking for comfort online. Nowadays, shopping online is easier than ever. In addition, searching for gifts can become a temporary break from COVID, providing mental relief. However, this relief is only temporary and can significantly impact your financial situation.
Keep in mind that in addition to the Christmas season, there are other special days for you and your family to celebrate throughout the year, such as New Years’, Valentine’s Day, Easter, Hanukkah, Ramadan, Thanksgiving, Diwali, birthdays, anniversaries, weddings and more. Without a plan, you may feel pressured to spend more than you can afford. Team Jackie Porter wants to ensure your last-minute holiday spending does not lead to financial regret.
Our advice on how to get holiday and Christmas gifts without financial regret:
Pay yourself first!
What financial goals do you have? Is it to buy a home, pay off debt or save for retirement?
Set up automated payments towards your goals, such as in a TFSA or RRSP. This can help you pay yourself first and then live on the remaining funds you have left.
Create a spending plan:
Create a spending plan to determine how much you want to spend on discretionary activities and events such as travelling, hobbies and entertainment for the whole year. Ask yourself what events you will need to spend money on that are coming up for 2021. How many birthday gifts and anniversaries will you need to set aside money for as the new year is an excellent time to start forecasting your expenses for the next 12 months and to earmark funds each month in your budget to pay for them.
Zero in on your spending and interest costs:
Review your spending patterns by looking at the last six months of your purchases. Review what you spent on your credit cards, bank accounts and debt payments. Ask yourself, what did you spend on discretionary expenses? Was it more than you thought? If you realize you spent too much on wants and impulse purchases, you can work towards reducing these expenses. This is valuable time to review how much interest you paid on debts and investigate strategies to reduce interests on all debts you are carrying. Refinancing debt at a lower interest rate will be a game-changer in putting more money in your pocket for your financial goals. In addition to cutting down expenses, identifying where your money is going can help you decide how much you will set aside for all your gift purchases.
Talk to your loved ones and adjust expectations:
If you have concerns about changing your gift-giving patterns, talk to your loved ones and make them aware of your intentions around limiting holiday spending. Consider a secret Santa if there are many gifts to purchase for Christmas. You can even decide as a group not to give gifts this holiday based on communicating your intentions clearly to your loved ones. Some people may choose to forgo Christmas gifts in the pandemic based on worries about job security and a limited emergency fund during the pandemic.
Not all great gifts need to be bought. Creating a gift instead of buying one can be very satisfying, fun and budget-friendly. You can offer your loved ones a home-cooked meal, spa day, massage, picnic and many more.
Be mindful of overlooked holiday expenses:
Do you consider holiday shopping as your only holiday-related expense? If so, you might be skipping other essential expenses. Be mindful of the costs of travelling to see others during the holidays, attending special events or dining out for holiday celebrations. These expenses are often overlooked but should be included as a separate category in your holiday budget to understand your accurate spending patterns better.
The pandemic has been especially hard on small businesses. Without your support, you may not find your favourite local store in business next year. Get your gifts from local small businesses if you want to help the community and resist the temptation to overspend online. Your purchase can significantly help their survival and also make your loved ones happy. If you aren’t sure which businesses to support, check our list of ‘Top 11 Small Local Businesses to Support This Holiday Season!
As a financial expert, a CFP can help you understand your financial situation and identify economic opportunities to reach the goals you might not be able to identify on your own. If you want to get started with a financial plan, book your complimentary 30-minute financial planning session with our team! We are here to help you on your financial journey as you build your financial fortune. www.askjackie.ca/contact-us