Everyone loves holiday parties, right? Whether you don an ugly sweater or a classy suit, getting together with friends to clink glasses and enjoy each others’ company can be a salve for the winter blues.
However, party a little too hard, and that egg nog hangover will really bite you the next morning. Canadians are the world’s most prolific December spenders, and many consumers will feel the same nasty come-down when they take a glance at their financial statements after the holidays are over and the new year starts in earnest. Suddenly, you realize that it was a bad idea to give your aunt that fancy gift, or that the vacation you planned stretched into your emergency savings budget without you meaning it.
Holiday spending can be one of the hardest parts of the annual budget to manage, especially when you’re trying to focus on maintaining your personal financial health and have been working hard all year long. Nobody wants to come across like a Scrooge, but you can still have a cheerful holiday season while avoiding the financial hangover.
Do The Math
You make simple, mathematical decisions about your budget every day: for example, what percentage of your income goes to your long term investments? Your emergency fund? Your discretionary spending in various categories? Doing a little napkin math and setting holiday spending to a percentage of your available funds for the month/year is a great way to know exactly what you can be comfortable spending this season.
Avoid Credit by Planning Long Term
Credit is probably the quickest way to solve your list of holiday purchases, but it’s also one of the easiest ways to overspend without noticing it. Cash is king, but it’s not just about how you pay at the till – it’s about thinking longer term and making your holiday plans a savings goal, rather than an expense that needs to be compensated for in the new year. You can prepare your holiday budget for the year by setting up a small weekly auto-contribution to a separate account – just divide the rough amount that your budget can handle by 48. It’ll be easier to spend from what you’ve saved, than to stare down the credit card statement that arrives in January.
Watch The Clock, Keep The Pressure Off
Everyone feels the anticipation of the holidays, but there can also be mounting pressure to get everything done, attend everyone’s social invitations, and be as festive as you darn well can. The stress can mount – but refocusing on what is most important to you, feeling out what works for your schedule, and above all avoiding making plans or decisions at the last minute, will help reduce any holiday anxieties and combat the feeling that you have to participate (or spend) to “do it right” this season.