7 Tips to Avoid Holiday Financial Stress

CALGARY, Dec. 8 /CNW/ - With the magic of Christmas, it is easy to get carried away and overspend.  After all the presents are exchanged and parties are done, you should be left with lasting memories, not scrambling to pay off your purchases. Following the advice of these financial experts will ensure you have an enjoyable and fun holiday season - one that you won't be paying off well into the New Year.

Tip 1: Make a list - and check it twice. 

Setting a budget before you start shopping is one of the best ways to manage your spending. "First, start by making a list of who you plan to buy for and how much you want to spend," said Manfred Grunling, a Certified General Accountant (CGA).  "Add up all the amounts and there is your spending budget. If the amount is more than you originally thought, you may want to reconsider what to spend on each gift or individual," he said. And don't forget the small things. The cost of wrapping paper, bows and gift bags may not seem expensive, but do add up.

Tip 2: Don't be naughty - Resist Impulse

Once you have made your list - stick to it! Impulse buying and deviating from your list are the fastest ways to lose control over of finances. "Retailers spend hundreds of millions of dollars on advertising knowing they will make you spend more than you need to," said Jeff O'Rourke, CGA. "Once they have your money, those retailers aren't concerned that you ran your credit card to the limit or have depleted your savings," he said.

Tip 3: Be nice to your wallet

"A great tip to avoid overspending is to only withdraw the cash you need from your account before you go shopping, and leave your credit cards at home," said Grunling.  It's harder to part with cash than to swipe a card. 

"Window shop online and price out your gifts," advises Adrian Chang, CGA.  "At the mall, stick to your list, and when you have used up your budget, head home."  And as lovely as it is to shop with friends and family - avoid heading to the mall with shopaholics. Their bad spending habits may rub off. Plan to meet for coffee after you finish your shopping; your wallet will thank you for it.

Tip 4:  It's ok to be a tiny bit like Scrooge

There are many stressors that come with the season - but money shouldn't be one of them. Hold on to your money, and don't succumb to the pressure to spend, spend, spend.  With a bit of creativity, you can turn the holiday season away from stress and frustration to fun and relaxation.

If you are on a tight budget, consider making gifts for your family and friends.  "Some of the greatest gifts I ever received were those that were made for me," said Doug Appleyard, CGA. "If you like photography, take some unique pictures and put them in a frame.  If you bake, give cookies as gifts," he said. 

"Your kids are experts in making special gifts," adds Grunling.   "These heartfelt crafts and the memories that go along with making them will last for years to come. For Christmas dinners, consider starting a tradition of sharing a special dish.  Whether it's that superb salad or the perfect pie, sharing the cooking duties takes a lot of pressure off the hosting household," he said.

Tip 5: Leave the plastic to Santa and his toys

Realistically, credit card use during the Christmas season is unavoidable for most shoppers. Spend wisely  and know the consequences.

"Using your credit card and not paying the balance when the bill comes increases the cost of the gift," said O'Rourke. "A purchase of $1,000 on a credit card with an annual interest rate of 19.5% and a payment of $100 a month after the purchase results in approximately $100 of interest, increasing the cost of the gift to $1100!"

Charging $1 to your credit card is $1 less you have to spend in the future. "Ask yourself, what do I sacrifice if I purchase this gift?  A spa day, new clothes, or something severe like a mortgage payment?" advises Cynthia Bakker, a CGA student in the Program of Professional Studies.

Tip 6:  Plan for a prosperous New Year 

If you find you cannot avoid using the credit card, you need to make a plan to get rid of the debt quick to avoid paying high interest charges. "Remember, your credit card limit is not your maximum budget," said Bakker. To pay off debt, Bakker suggests a written plan.  "A written plan to get rid of debt will make you more motivated to execute the plan," she said. "It also helps to tell someone about the plan, holding you more accountable." Leave room in your budget to set aside cash to put toward your debt. 

"To avoid paying high interest charges, set up internet access to your credit card accounts and monitor daily to keep on top of your balance," advises Chang. "Pay off full credit balances each month, and schedule payments electronically to avoid missed or overdue payments," he said.  "If a payment is missed, pay off the entire accumulated balance including purchases after the statement date to avoid additional interest charges."

Tip 7: 12 months before Christmas…

With each expense this Christmas season, keep a detailed record so you have a reference for preparing your next Christmas budget. "With Christmas fresh in your mind, setting a budget for the 2011 holiday season gives you realistic expectations and 11 months to save," said Appleyard. "Remember, your budget should include not only the gifts you intend to buy, but also entertaining, travel or parties," he said. 

"Set an amount you want to spend for next Christmas, and divide by the number of pay periods between now and December. The total is the amount you need to save from each pay cheque," Appleyard added.   "This amount has to fit in with all your other expenses throughout the year.  Can you afford it?   If not, relook at your budget. The best way to save is to set up an automated deduction from your pay cheque into a Christmas savings fund."

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For further information:

Janice Harrington, Vice President, Communications and Government Relations at CGA Alberta:
Email: [email protected] or phone direct: 403 299 1323 or cell: 403.614.7941