How you can manage your finances during the holidays

For many Canadians, the holidays are traditionally a time when budgets can be forgotten, credit card balances may sneak higher, and many shoppers prioritize gift-giving and holiday cheer over boosting long-term savings.

It’s easier to overspend and then face the New Year with needing at least a month or more of intense saving to recover.

But you don't have to resign yourself to a quiet January to have some fun this holiday season. There are plenty of ways to help you save money during the holidays, whether you’d rather shop the mall or craft DIY gifts or enjoying eating more affordable fare. 

Here are some tips and shopping hacks to try to help curb your holiday spending without dampening your spirits.

The key to sustainable holiday spending and less financial stress is to figure out what you want to buy and then decide whether the items you find are worth the price. That way, you're less likely to make impulse purchases or miss out on cheaper merchandise.

A simple spending plan starts with listing out everyone you plan to give a gift, what you want to give them, and how much you want to spend on them. It’ll give you an idea of how your spending will be changing leading up to the holidays. Try to make sure you have this in place before you get drawn in by festive display windows or limited time online deals. 

If you're feeling short on time or energy, you may feel tempted to wait until you get to a store to figure out what you need, rather than bring along a shopping list. But shopping without a plan in place is almost always a mistake–especially now, when retailers are more motivated than usual to tempt you into filling up your cart.

With many retailers relying heavily on traditionally hot holiday shopping periods, such as Cyber Monday, to ring up crucial sales, they're all but certain to surround you with extra-tempting deals to get you to add more than you planned to your cart. Rather than relying solely on willpower to resist impulse buys, suit up with stronger armor by drafting a pre-planned gift list. Then do your best to stick to it. You'll be more focused when you shop and will also have more time to compare prices.

It's easy to get swept up in the holidays and want to shower your loved ones with generous gifts. But no matter how good a purchase may feel in the moment, the last thing you want to do is overspend so much that your holiday spirit turns into a holiday regret. 

If you find that there's not much difference between your income and average monthly spending to comfortably pay for your holiday purchases, you may need to readjust the amount of money you plan to spend. Pull out a highlighter or use a personal finance app to track your spending habits and see if there are purchases you can temporarily do without. Also round up all of your one-time purchases and add up how much you spend on them per month. Assuming your income doesn't fluctuate, the amount you usually spend on one-off purchases without going into debt should give you a fair idea of how much you can afford to put toward holiday purchases.

After drafting a holiday budget and figuring out your spending limit, you may find that your ambitions for the season don't match your reality. If your holiday wish list is too large for your budget, then you'll need to make some cuts. The key is to do so mindfully and prioritize your purchases so that you don't regret your choices.

Some holiday purchases are likely to be more meaningful to you than others. So rather than try to buy everything on your wish list, think carefully about what you really care about and what will give you or those on your wish list the most long-term satisfaction.

A 2022 survey commissioned by the charity CanadaHelps.org found that many Canadians prefer feel-good gifts with a social benefit, such as charitable donations, over more typical holiday purchases.¹ Spending money on a worthy cause could lift both your moods this season — especially if you let a gift recipient choose where to put a charitable donation.

According to researchers at Simon Fraser University and the University of British Columbia, the evidence behind 'prosocial spending,' such as donating to charity, is “robust." For example, research shows that people often “reap emotional rewards" when donating to causes that feel personally meaningful and get a happiness boost from spending money on people in need.²

Budgeting for the holidays or tracking your spending so you don't overdo it, can be made easier with online tools. 

Never set up a budget before? Check out Scotia Smart Money by Advice+ for long-term help with managing your budget. Scotia Smart Money makes it easy to track your bills, monitor spending and manage your cash flow from the convenience of the Scotiabank app. Plus, you'll get personally tailored advice you can use to better manage your money.

You can also consider the Scotiabank Money Finder Calculator to see where you're at with your income, expenses and if you have additional funds to put towards your goals. Although the tool is designed to help you prioritize everyday living expenses, rather than holiday shopping, working with it could give you a helpful framework for thinking about your holiday spending budget.

Whatever you do, don't let your desire for a festive holiday overwhelm your financial health next year once the festivities are over. Racking up high interest debt during the holidays could follow you around for long after the New Year.

You might want to consider if you want to use an installment plan that is available on an eligible Scotiabank Visa* credit card for your holiday spending.  A credit card installment plan is one way to pay for eligible purchases over a fixed period — through your credit card. It may help you to take control of your budget and manage your spending by providing flexible payment options on your credit card. Scotiabank now offers Scotia SelectPay^TM installment plans, that are available on eligible Scotiabank Visa* credit cards.** 

Before you consider an installment plan, check how much room you're likely to have in your post-holiday budget and make sure you can afford to fit in the monthly minimum payments on that plan and be able to pay them off on time. It's important that you are not making purchases that will overly stretch your budget even if you want to use the installment plan on your card to pay that purchase. You will need to build the amount of your installment payments that are part of your credit card balance into your monthly budget so that you can pay them off on time each month.  

If you're already prone to overspending, you will want to be extra cautious about financing holiday purchases. You may also want to consider bringing just your debit card when you visit the most tempting stores.

If you already know what you want to buy this holiday season, then you're in an ideal position to shop around and take advantage of early deals. Shopping early may also save you headaches later on. With many retailers dealing with major supply chain problems this year because of the pandemic, they are having a harder time maintaining a steady stock of popular products. As a result, shoppers are being encouraged to check off items from their wish list as early as possible so they don't miss out.

Rather than wait until the last minute to do your holiday shopping, visit your favourite stores now and check to see if they're offering any special deals to encourage early shopping (like on Black Friday). In addition, use this extra time to shop around and compare prices. If you find a lower price at one store, you may be able to convince another retailer to offer you an even better price.

Another time-honored way to trim your holiday spending is to recruit a partner for your holiday gift-giving. By pooling your resources, you'll be able to give better gifts with less expense, and your loved ones will appreciate higher quality gifts that they can hold onto for longer than a season.

Alternatively, consider organizing a gift exchange or Secret Santa with family or with a smaller group of friends so you don't have to buy so many gifts.

With so many retailers struggling with supply chain woes and higher shipping costs this year, you may also find better prices on gifts and other holiday purchases if you stick to stores closer to home. Supply chain challenges are affecting retailers big and small. Shoppers who lean heavily on online purchases could experience some sticker shock if retailers are forced to pass more of their supply costs onto customers. In addition, retailers that sell items in person as well as around the world may also feel extra motivated this year to offer special deals to locals so they can save on shipping.

You could be surprised by how much value you have sitting on your rewards cards. Depending on how much you have earned, you could use your rewards to fund a holiday party, purchase holiday gifts or help pay for holiday travel.

For example, a year's worth of your everyday spending on gas and grocery on a cash back card, such as the Scotia Momentum® Visa* Card, could net you more than enough cash back to pay for several gifts. Also purchases made with your Scotiabank Passport® Visa Infinite* Card, like groceries, restaurant and transit, could earn you enough Scene+ points (up to 3 points per $1 spent) to redeem your points for travel, gift cards or other rewards.

Some new cards also offer sign-up bonuses if you spend a pre-set amount. If you don't already have a rewards card that earns points or cash back, now's a good time to apply for a card or switch to one of those cards.

Another good way to shave your holiday expenses is to choose non-traditional gifts that are more likely to be discounted. To get the best deals, scan the flyers you receive in the mail and use coupon apps to check for deeply discounted merchandise.

Also consider what your more practical-minded loved ones would appreciate in a new gift and what might help them most. Gift cards, for example, may seem like a cheap or lazy gift. But recipients living on a slender budget may love the rare chance to shop for themselves.

Alternatively, think outside the traditional holiday gift box and consider intangible gifts that you technically can't wrap. You might offer your services to help save a loved one time, cook for them, organize a potluck, or provide another highly valued service.

The holidays don't have to be expensive to be festive. If you have a pattern of overspending as soon as the weather begins to cool, take a moment to rethink how you're spending your downtime and your money. You may need to give yourself some more room than usual to reflect upon the past few years of holiday spending and come up with a more realistic plan for a lighter season.