Manage your money like a pro this holiday season.

3 Minutes Read

Finance tips for a happy holiday and a debt-free New Year.


From gift exchanges to holiday parties, home decor to travel expenses: lately, it feels like the credit card purchases never stop. The 2021 holiday season is gearing up to be especially stressful, as Canadians face rising inflation and supply-chain shortages. But these tough conditions won’t stop us — in fact, experts are predicting that Canadians will spend more on holiday shopping this year than they did in 2019, pre-pandemic. 

The best way to protect your wallet is to stay financially informed — so we’ve put together a strategic guide to holiday shopping that covers everything from budgeting to Afterpay. Cheers to a jolly holiday that won’t leave you with a ‘financial hangover’ in the New Year!


Set a holiday budget. 

We’re not going to tell you how much to spend on a gift for your mom — but we can help you do the math! Start by subtracting your non-holiday expenses (like rent, your phone bill, utilities and groceries) from your total income for December. The number you’re left with represents your disposable income. Disposable income is what you use for fun purchases, like takeout or clothing — the things you want, not what you need. 

Decide what portion of your disposable income makes an appropriate holiday budget — the goal is to avoid using your credit card to borrow money. Financial experts suggest that 1% of your total household income is a reasonable amount to spend on gifts, but this solution isn’t a one-size-fits-all. What’s important is committing to a budget that won’t leave you with debt in 2022. 

Still stuck? The next section will cover some tips for prioritizing your spending — and deciding which holiday expenses you can live without. 


Organize your expenses.

So you have a holiday budget. Now, allocate your money so that you don’t miss out on the most important purchases.

  1. Prioritize all the things you need to buy: gifts, decorations, travel and so on.
  2. Add the expenses that are non-negotiable; for example, the cost of a plane ticket to your hometown. 
  3. Identify your “nice-to-have” expenses — the costs you could live without. 
  4. Add up the total cost of everything on your list. 

If that number exceeds the budget you’ve set, you need to remove some items, starting with the ‘nice-to-haves’ in your lowest priority category. Keep going until you’re within your budget. Remember: leave a little wiggle room for unanticipated costs.


Don’t procrastinate.  

There are so many reasons you should start shopping early – access to early sales, getting the item you wanted, preventing holiday stress – but this year, we’re facing a new problem. Supply-chain disruptions are making it hard for companies to keep up with post-pandemic demand, specifically with labour shortages and transportation bottlenecks. 

You’ll likely notice higher prices and more “out of stock” items as you shop. In particular, toys and electronics are two product categories that have been hit with shortages. If you have your heart set on a specific item, it’s a good idea to get it as soon as possible. Shoppers who wait until the last minute may find their choices limited, causing unnecessary stress and surprise expenses. 


Cut costs where possible. 

Once you start looking, you’ll see lots of opportunities to save without sacrificing quality, like opting for in-store pickup when ordering online to avoid delivery fees. Even if you’re only saving a couple dollars at a time, it all adds up!

Resist the urge to buy impulsively — give yourself enough time to shop around for the best price. You can also use a price-tracking extension on your browser to alert you of price drops and offer product comparisons. 

Choosing to DIY select gifts and decor is another way to save a few dollars. Homemade cards, gift tags, and tree ornaments are low-stakes and low-cost alternatives to store-bought items, and even add a personal touch. Just don’t get sucked into complicated projects that will end up costing more time and money than a ready-made solution! (We’ve all been there, right?)


Avoid deferred payments.

You’ve found the perfect gift — with a price tag that’s beyond your budget. It might be tempting to opt for ‘buy now, pay later,’ but this popular payment method is less innocent than it seems. If you’re unfamiliar with the term, ‘buy now, pay later’ offers third-party payment plans to consumers, spreading one large payment out over several weeks. For example, why pay $98.00 for a blouse when you can make a payment of $24.50 every two weeks instead? 

While companies like Afterpay and Sezzle typically don’t charge interest fees, they have a more insidious effect on your finances. Purchases appear less intimidating when they’re broken into digestible installments, luring you into spending more. Plus, it’s difficult to stay within your holiday budget once you start extending payments past the season — and missing payments can result in late fees or even lower your credit score. (Don’t know what a credit score is? Check out our post here!)


Maintain perspective.  

The holidays are magical, but they’re also short-lived. We hope you have the best celebration, while also setting yourself up for success in 2022. It’s all about finding that balance.

Happy shopping!

Ferron Guerreiro