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How does your holiday budget measure up?

Do you worry about overspending during the holidays? If so, it’s time to take action. Setting up a realistic holiday budget may remove some of the worry.

Canadian holiday spending figures

Canadian holiday spending figures are staggering. In December 2014, Statistics Canada reports that Canadians spent a whopping $42.1 billion at retailers.

Yet average holiday spending varies. Canadians plan to spend less than we did last year, according to a recent report. Field Agent Canada’s 2015 Holiday Spending Survey found Canadians plan to spend $875 this year on holiday food, decorations, and gifts, down $71 from $946 in 2014.

Americans, however, expect to increase holiday spending. An American Research Group survey found Americans plan to spend $882 this season, $21 more than they planned to spend last year.

Why you need a holiday budget

Though you (or your spouse) may not love the idea of a holiday spending budget, there are several good reasons to have one:

  1. It helps avoid overspending overall. A budget is a reason to say “no” to impulse purchases.
  2. It makes you aware of how much you’re spending. And it makes it easier to avoid splurging or underspending on individual gifts.
  3. It increases the likelihood of paying off holiday season credit card bills in full. This helps reduce interest charges.

Create a holiday budget

Be realistic about your holiday gift budget. Set an affordable amount for each person on your list. Total the amounts for your annual holiday gift budget.

Include holiday meals and activities in your budget. Track decorating and Christmas tree costs. Keep a running total as you shop. Include every holiday-related purchase. Add everything up. Add this total to your total gift budget and divide by twelve for your monthly holiday budget. As the holiday season is also a time for giving back, consider including a Christmas donation.

Use online tools to help track holiday spending

Try different savings scenarios with an online savings calculator to discover what you’ll need to save monthly to reach your holiday budget goals.

Add “holiday budget” as a monthly spending category, and start an automatic transfer to a high interest savings account.

Track how well you’re sticking to your plan with a gift giving planner that keeps a running total of spending.

Stretch your holiday gift budget

Search out online deals, in-store coupons and specials on gift list items, meal ingredients, and decorations. Redeem and apply reward points to purchases. Gift your services (like shovelling snow, programming home electronics, or creating baked goods and handicrafts) instead of buying gifts that may not be used.

Save money on holiday entertaining

Host a potluck holiday dinner and ask each guest to bring their favorite dish. Make holiday decorations using simple craft supplies from the dollar store - look to Pinterest for inspiration.

Don’t let holiday spending stress throw a damper on the season. Once you know how much you can comfortably afford, build it into your annual budget and start saving monthly.

For more budgeting tips and tricks, stop by your local Meridian Credit Union and speak to one of our knowledgeable Financial Services Advisors.