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The holidays are upon us once again and along with the joys of spending time with loved ones, eating good food, and presents come the inevitable spending. It’s a wonderful time to treat yourself and the people you love, after all, this is a big part of why we work so hard.
Canadians are planning to spend an average of $1,675 on gifts, travel, and entertainment this holiday season [1]. Looking at the bigger picture, it’s a small price to pay for the happiness of the people in your life but it’s also important to remember that this season doesn’t derail the financial goals you’ve been building towards all year.
1. Know what you can actually afford
It all starts with a plan. It takes a few minutes to figure out:
- How much cash is left after paying all non–negotiable bills.
- What holiday essentials you must cover (gifts, travel, gatherings, etc.)
- Your absolute maximum spend without touching your savings or investments.
This gives you a clear number and prevents you from overspending. December can get busy, and this gives you a bit of a head start to know exactly where your limits are.
2. Set your holiday budget
Now that you have a number, it’s time to divide this into categories:
- Gifts
- Food/hosting
- Travel/transportation
- Miscellaneous (last–minute events, small gifts, etc.)
This ensures that your spending is balanced, and you can make sure the essentials are covered first before any extras.
3. Protect your core financial goals
4. Cut low-value spending first
Trimming back on low-value spending can help you stretch your holiday budget even more. According to BMO, Canadians are already planning on cutting back on decorations, dining out, and clothing/entertaining around the holidays [2]. Reducing spending like this gives you more wiggle room for what actually matters.
5. Make a plan to recover
No doubt that after the holidays, we will need time to recover from holiday spending. Now, if you had a couple of months to prepare, you’d probably be fine and recover quicker but if you’re just now starting to make a plan, the key is cushioning January before the bills arrive.
Set a firm date to return to your usual budget and map out how you’ll clear any holiday balances within a couple of pay periods. You can also set aside any extra from your holiday budget to act as a buffer for your expenses after.
Final Thoughts
With a little bit of clarity and intention, you can enjoy the holidays guilt-free and still stay aligned with your financial goals.
Sources
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