Is your holiday budget naughty or nice? Is your holiday budget naughty or nice? Tips for keeping holiday spending under control.Fall 2010The holidays can be pretty tough on the wallet. It’s easy to get caught up in the generosity of the season and overspend. That’s a recipe for a big holiday debt hangover and a New Year filled with stress, not joy.
But, with a little planning and foresight holiday budgets can be nice, not naughty this year!
Not-for-profit Investor Education Fund (IEF) has developed a series of online tips, calculators, worksheets, videos, and other resources at www.GetSmarterAboutMoney.ca to help Canadians celebrate the holidays without breaking the budget.
Here are a few tips from “How can I control my holiday spending?”
1. Budget for holiday spending
Some experts suggest spending no more than 1.5 per cent of total income on holiday spending. For Canadians with a household income of $50,000 that represents $750 which is far less than the average $1,500 spent on gift giving alone each year. This online worksheet can set up holiday budgets and stick to it: http://www.getsmarteraboutmoney.ca/managing-your-money/planning/budgeting/Pages/gift-giving-worksheet-and-budget.aspx
2. Save first, shop later
Make saving for holiday and family celebrations a year-long monthly commitment. Money spent will be cash on hand rather than credit card debt. Read more savings tips here: http://www.getsmarteraboutmoney.ca/managing-your-money/planning/budgeting/Pages/how-can-i-make-it-easier-to-save-money.aspx
3. Cash beats credit
One of the best ways to stick to a budget is to pay cash for everything. If it must be a credit card, pay it off on time. The longer it takes to pay off the debt, the more interest accumulates which plays havoc with holiday budgeting…and New Year’s resolutions. See how long it takes to pay off credit card balances here: http://www.getsmarteraboutmoney.ca/tools-and-calculators/credit-cards/default.aspx.
Another reason to avoid high credit card balances is that it can lower credit scores. Spending more than 30 percent of credit card limits can cause credit scores to drop. Learn more about credit scores here: http://www.getsmarteraboutmoney.ca/managing-your-money/planning/managing-debt/Pages/what-is-a-credit-score.aspx .
4. Keep travel costs under control
Travelling during the holidays can put a real dent in the budget. When visiting family and friends, consider car-pooling to keep costs down. For travel across or out of the country, check flight schedules as fare prices vary depending on the day of the week for departures and returns. If you choose last minute or special deals review small print carefully, especially for cancellation policies. Learn more about reducing travel costs here: http://www.getsmarteraboutmoney.ca/managing-your-money/planning/budgeting/Pages/how-do-I-reduce-my-travel-costs.aspx
For more on holiday spending check out IEF’s new blog at http://blog.getsmarteraboutmoney.ca.
This is one in a series of communiqués from Investor Education Fund (IEF). IEF offers unbiased financial information to the general public via www.GetSmarterAboutMoney.ca, and to students through its Taking Stock in Your Future teacher program, Funny Money assembly program and online financial tools for teachers, parents and students. The not-for-profit organization was established by the Ontario Securities Commission (OSC), and is funded through OSC enforcement settlements.