According to PWC’s 2020 Canadian holiday outlook, 45% of respondents plan to spend less than last year this holiday season. More than half (57%) state the pandemic’s negative impact on their spending capabilities as the reason.
Consumer holiday spending is on the decline; however, Canadians still plan to spend $1,104 on average—down $489 from 2019. Travel spending will likely decrease drastically by 58.5%, as more than half (59%) of respondents plan to stay put during the holidays this year.
Younger generations (Gen Z and Millennials) plan to spend roughly $158 more on average than Gen X and Baby Boomers, at $1,216 and $1,058, respectively. This younger group is more likely to travel during the holidays, which may increase spending.
Similar to last year, most of the respondents’ holiday spending will be on family members.
While creating a budget for your general expenses throughout the year can help you meet your financial goals, many forget to budget for these extra holiday-related costs.
Here are a few things you can do to trim your spending before the new year and have a jolly holiday season.
Consider a simplistic approach
If you haven’t finished decorating yet, consider a minimalist style. Yes, Christmas is just around the corner, but rushing to the stores for last-minute bobbles and tinsel could cost you a pretty penny. Most Christmas decorations won’t be on sale until after the holiday season, so come to terms that you’re going to have to cut back a bit. Make it a family adventure and scavenge for fir boughs and other natural decorations in the woods! This creative, homemade approach can apply to other things, such as making your gifts and cards or baking too.
Cash in your rewards
If you have a rewards credit card, you may have hundreds of unused dollars in cash back that could go toward gifts, food, or decorations. Pay attention to when your cash back is credited toward your statement. Some cards can allow users to redeem rewards whenever they choose; however, others may apply cash back as a statement credit monthly or annually. You may have access to a year-end lump sum of cash back that could pay down your post-holiday balance.
On the other hand, using points from your card(s) that have flexible redemption options (both cash and travel rewards) is also an option that can reduce the sting of those holiday expenses, but you may not get the top value for your points. Saving your points balance for future travel can be more rewarding.
The best credit card for buying gifts this holiday season is a flat-rate rewards card for most people. This type of card can reward shoppers for all sorts of purchases, no matter the category. So, you won’t be limited to earning top rewards strictly on groceries, gas, or travel, but toys, gifts and décor too.
Credit can be the most rewarding payment option during the holiday season. Not only can members earn rewards, but credit cards can safeguard your purchases with shopping coverage like extended warranty and purchase protection. However, it is important to be mindful of your credit card balance. Although it is not always possible, you can avoid interest charges by paying off your credit card in full each month. Carrying a balance on your credit card month-to-month can be costly and quickly outweigh any advantages of rewards earned.
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Learn to say “no” and improvise
Although the FOMO (fear of missing out) can be hard to ignore, you’ll thank yourself later. Use up all your holiday leftovers first before eating out. Enjoy holiday movie marathons at home instead of going out to Christmas markets and revisit your closet instead of buying a new outfit for the holidays.
Have “the talk” with your friends
We all love exchanging presents with the people we love but buying for everyone on our list can be expensive. If you’re still shopping for presents and find out your friends have yet to find you a gift as well, suggest playing Secret Santa and set a price limit for the gift exchange. The holidays should be about quality time with our loved ones, anyway—even if it is virtual this year!
Limit your borrowing to reduce the New Year’s debt dread
Undoubtedly, Canadians will give their credit cards a workout this holiday season. But you can spare yourself the statement shock in January by using your credit card responsibly. If you plan on carrying a balance, use a low-interest rate credit card and pay it off as soon as possible. This can put you on track to reduce debt in the new year.
The holiday season is a time to treat yourself and others, but it should also be stress-free and enjoyable. Start the new year off on the right foot and trim down any excess debt.
This post has been updated.