How to: Make Smart Financial Decisions over the Holidays

Many people consider the upcoming season and all the holidays it brings to be the best, happiest, most wonderful time of the year. Over the next couple months, Canadians will celebrate a number of holidays, including Christmas, Hannukah, Kwanzaa, and New Years celebrations from across a variety of different cultures. While these events and are fun and represent a great chance to connect with family, they inevitably end up costing people a ton of money. The gifts, the parties, traveling and more can end up requiring a person to spend thousands of dollars in a relatively short period of time, on top of all their other fixed costs of living like rent, food, and so on. According to a 2019 report by Deloitte, the average Canadian spends $1706 in total on their on holiday expenses, including gifts, travel and entertaining; for many Canadians, that’s like adding a second rent payment and more to their monthly expenses for December and/or January. Inevitably, people that aren’t prepared to cover that financial burden are likely to spend the first few months of the new year trying to catch up on holiday credit card bills.

COVID safety protocols of course mean that this year’s average spend is likely to be less than 2019’s; most of us will not be attending holiday parties, going on vacation or traveling to see family this year in accordance with public health guidelines. However, the pressure to spend on seasonal items wherever possible, particularly on gifts, isn’t going anywhere. The trouble here lies in the fact that we’re almost a year into this pandemic. Millions of Canadians have already been forced to deplete their savings over the course of 2020 due to COVID-related issues, and now that virus hot spots across the country are moving into another round of lockdowns, there are countless Canadians who are about to weather the holiday season without a steady source of income. Even for those that haven’t lost their jobs, the cost of adapting to life with COVID has put a financial strain on countless Canadian households. Cutting costs on holiday spending is going to be a must for many.

With that in mind, you may be asking yourself, how can I make smart financial choices this holiday season? As mentioned, with COVID unfortunately ensuring that most Canadians will not get to attend holiday parties, enjoy international vacations or travel to see loved ones, the main thing you really need to be mindful of this year is your gifting. Of course, there will still a variety of other expenses you shouldn’t forget to consider, like household holiday dinners, mailing Christmas cards and so on, but if you can stick within your budget for your gift list, starting 2021 on a financial high note may well be within your grasp. Here are a few tips on how you can stay within the financial lines this December.

Make Your Presents
There are a variety of different ways you can make gifts for the people in your life that will still be awesome presents and cost you way less than buying something brand new for everyone. This is a well-known tip, but if you’ve never taken advantage of it, this might be a great year to give it a try! Particularly for the people who are close to you, something meaningful that you make for them (particularly if it plays on memories you’ve shared together) is going to be much more important to them in the long-run than most material goods you could buy them.

Think about your own talents or skills and consider how they could be applied to gifting. If you’re an excellent baker, for example, you could prepare a large batch of holiday cookies or treats and package them for each individual using materials you could easily find at any dollar store (ex. cellophane, mason jars, holiday ribbons and so on). Is there a particular food that a friend used to make for you all the time, or that you used to share with them regularly? Try making them your version of it. If you’re a talented artist, you could create small pieces for others and frame them (again, you can find low-cost frames at most dollar stores or craft stores). If you’re not gifted in “domestic” pursuits, that doesn’t mean you can’t make something. If you’re interested in music, for example, you could use your music library to your advantage. You could make each of your loved ones a personalized playlist, holiday-themed or not, and perhaps include some custom cover art or a guide as to why you picked those songs for them. Ultimately, if your gift both reflects you and shows your recipient that you’ve taken the time to think about them, you’re going to get excellent reviews from everyone on your gift list.

Also, don’t forget to think about how you can reduce costs on wrapping supplies and cards by using unconventional materials or things you have around the house. People spend tons of money on wrapping paper, tissue, bags and cards when these items realistically have an incredibly short lifespan. While gift bags can be re-used, most wrapping supplies go right in the garbage after your gifts have been opened, regardless of how much money you spent on them or how good the present looked. Instead, you can use newspaper and regular hemp twine to wrap presents; if you feel that it won’t look “fancy” enough, you can add some extra holiday gift bows or tags to jazz up your presents a bit. You can also use classic brown paper instead of newspaper for a different look, which also gives you the option to draw or write on the paper to personalize it (or, if you have kids, you could get them to draw the designs for you).

Switch Up Your Traditions
This is going to be an unusual Christmas, so why not consider veering away from your standard holiday practices if you predict they might put you in a tough spot financially this year. For example, within your own family, you could opt to start a Secret Santa-style gift trade this year instead of buying for every one of your immediate family members. That way, each of you can focus putting your total budget to good use for one gift instead of trying to focus on getting a great present for everyone with the same amount of money. Overall, you’ll likely be able to spend way less overall while still being able to splurge on one great present for your pick.

Also, think about ingrained habits you may engage in over the holidays. For example, are you the type to buy all your presents at the last minute? If so, it’s just a fact that you’ll likely pay more for your gifts in the end. As retailers run low on stock of the best items as they’re bought by more prepared shoppers, you’ll be more likely to struggle to find things your loved ones will enjoy without spending more. Particularly with online shopping likely to be the largest channel for gift purchasing this year, waiting until the last minute means you’ll have to shell out big time on shipping costs to ensure your gifts make it to you at the last minute. Beware of this if you live in an area of the country where lockdowns are requiring malls and indoor retail to shut down; there won’t be a truly “last minute” option this year. Like budgeting for anything else, planning ahead with your gifts is the best, tried-and-true way to reduce your expenses.

Go Used Instead of New
This one can be tough for many people to wrap their heads around, but sourcing used presents is a great way to save money on the cost of gifts this year. Of course, there are limitations here, but there are plenty of cases where you can find a great used present for a lower cost than a newer version of the same thing. An excellent example of this in practice is buying used toys for young children. Many people are expected to (whether it’s self-imposed or not) purchase presents for each individual young child in their extended family. Depending on how many children you’re buying for, buying a new toy for each of them can add up quickly. Instead, you could try to source used versions of the same in good condition to save on the total you’d otherwise spend. Young kids are less likely to have, well, snobby feelings about receiving a used gift (or even notice that it’s used!). You can do this online through marketplaces like Kijiji, or you could even ask friends, co-workers or others in your network if they have anything they’d be willing to sell you for a good deal.

Another addition to this rule is to re-gift where possible. We know this strategy is seen as a major faux pas by some, but if you’ve received an item that’s collecting dust in your basement and you think one of your loved ones might enjoy it, consider giving it to them. Of course, you’ll want to avoid re-gifting in the same circles so that there’s absolutely no chance your recipient will find out where it came from. But, if you can re-gift something you’re simply not using, you’ll be saving money while also ensuring that that item avoids reaching a landfill before being used at all.  

Think About Groups
Another way to save on gifts this year is to think about where you can turn a number of individuals on your gifting list into one larger group. For example, within your own family, households are clear groups that can receive one present instead of a number of individual gifts. If you’re buying for a household with young kids and feel obligated to get the kids something they’ll enjoy separate from their parents, you can still group all the children together to receive one present instead of getting each a present. Or, if you buy presents for close friends as well, you could think of a way to buy a group of friends one present that you can enjoy safely together as a group over the winter. That way, you can add up your total budget for each individual present to create one larger budget; chances are, you’ll be able to find a great gift for the group with that larger pool of money, but you can also aim to spend less than what you would have buying for each individual.

An excellent option to consider when gifting to groups is to make a donation to a non-profit organization on the group’s behalf. This, of course, a great gift simply based on the fact that it’s a meaningful present that will support a cause you know your group of recipients cares about. But, it’s also a way to save on the total you’ll spend overall versus buying for individuals. You can gift a generous donation in one lump sum that you can select according exactly to your budget (it’s much harder to stick within a rigid budget when purchasing numerous goods with set prices, but you can pick the exact dollar amount of your donation). It’s also sets a great example for young children if they’re included in the group of recipients; holidays like Hanukkah and Christmas are about more than receiving material goods, so including them in a donation to charity is a great teaching moment for them. If you’re interested in making donations but unsure about where to start, Maclean’s has offered a guide on the 100 best charities in Canada in 2020 based on factors like their transparency and how effectively they use their donations. You can find it here.

Think Strategically
If you do happen to get gifted with some cash gifts, gift cards or anything else similar over the next few months, try to think about how you can use them to your advantage. Though most people use monetary gifts to splurge on non-essential items they’ve coveted, do your best to avoid that temptation and instead use your gifts to cover the costs of an essential purchase. For example, put your cash gifts away to pay for groceries, pay your phone bill or simply put them straight into your savings. Or, if you get a gift card, think practically about how you can use it to cover something you’ll need to buy or replace, or if you you need to purchase a gift for another person later in the year.

Practical Presents
If the events of this year have you considering taking a new approach to the holiday season, you’re not alone. Many Canadians are having an odd time reconciling a year of financial strain with the traditionally materialistic and expensive nature of the holidays. It’s OK if it feels strange to splurge on non-essentials if it’s been a year of financial ups and downs for you or the people in your life!

So, if you can afford to, think about how you can put your gifting budget to good use on practical gifts. There are a ton of products and services you can gift your loved ones that will help them in concrete ways over the next year and beyond. For example, cash is an obvious choice, but the gift of a contribution to one’s an emergency fund is a great way to offer someone an additional level of support for the coming winter, particularly if your recipient works in industries like retail, food service, hospitality and more. Share that you want your recipient to keep that money saved for emergencies instead of spending it on extras. To help ensure it remains saved instead of being frittered away on non-essentials, you can suggest they start an account with QUBER so they can keep it stored for free, securely and separately from their main bank account. That way, your recipient will be less tempted to spend it impulsively and end up much more likely to keep your gift saved (and have the option to continue to grow it out of arm’s length!).

If you’re interested in more suggestions for practical gifts, stay tuned later this week for a gift guide that’ll offer you a bunch of great ideas for financially smart presents!

Think About 2021
Finally, if this post is your first reminder that the holidays are now approaching rapidly, it’s probably too late for you to be focusing on saving up for your gifts. However, if that’s the case, take it as a lesson for next year; the holidays will happen again in a year (fancy that!), and you don’t have to be in the same position again. If you start saving for the holiday season earlier in 2021, you’ll have a great financial cushion created to cover the costs of the holidays so you can spend liquid cash on your gift list instead of charging it all to credit. Even saving $10-$15 off each paycheck starting mid-year will offer you a great degree of financial flexibility come December. That way, you can move into the next new year on a high note financially instead of trying figure out how you’re going to cover the costs of December.

We hope these tips help you cut your holiday expenses and use your gifting budget to your best advantage. This will be an unconventional holiday season, and unfortunately, a year where many of us won’t get to spend time with their extended families in the manner we’d usually expect for December. However, now that the holiday season has begun, we hope you still get to safely enjoy time with your loved ones to the fullest, whether in person or over Zoom calls, while also staying on track with your financial goals. Happy holidays!

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