Dos and Don’ts – financial advice for the holiday season
The holidays are often a time for over-consuming and over-spending. We second guess ourselves and wonder whether we’ve purchased enough in terms of gifts, food and drink for all the get-togethers. Our wallets are opened more frequently in the six weeks leading up to end of the year, than at any other time of the year.
While some people adopt a laissezfaire approach and just go for it, others may be wanting to rein in old habits. As with most things in life, when you know better, you do better.
Create a list of the people who you are buying for, along with what you intend to get them. Set a budget before you venture out to shop. Being tempted by the beautiful window displays, and being drawn into the excitement of the season is lots of fun in the moment, but not so much fun when you receive your credit card statement. By having a monetary plan for how much you want to spend on each person in advance, will help to keep you under control in the stores.
People just want to have fun, but don’t try to keep up with the Joneses. Others may be (momentarily) impressed with a fancy charcuterie board, but five minutes into the evening, no one will care, nor will they remember. Spend your money on creating great experiences, not on expensive items that are stored away for 11 months of the year.
Stock up – especially if you’re going to be hosting, or attending other parties where you may need to bring a contribution, or a gift for the host. Look for sales. If you notice a nice bottle of wine that would be suitable for a number of occasions, and it’s on special, pick up the quantity that you’d need for each event. The time and gas, alone, of having to go back multiple times will also save you money.
Make sure that you don’t skip an automated contribution to a registered savings vehicle, like an RSP or TFSA, in order to add to your holiday budget. Compounding works in your favour, and can work against you too. Depending upon your age, every dollar could yield as much as $32 in your retirement. If you miss a simple $250 contribution, it could lead to the equivalent of a month of gross income (that you will need in the future) flying out the door.
Use reward cards that offer cash or travel perks. If you’re a bit trigger happy with your credit card, why not reap some benefits from the card provider in the New Year.
Do not borrow money to shop. Some people are too quick to treat their lines of credit like a savings accounts. When you do so, you never really know what you paid for an item, or the accumulating interest charges attached to it. Preferably, buy with cash or debit, or use a credit card with reward points, and then immediately pay it off.
If you recognize your weaknesses, get help from a professional. Often their advice will help you to reach your long-term goals, without giving in to short-term spending sprees. And, above all else, enjoy the holidays.
Brandon Parkes is a Senior Consultant with IG Wealth Management. He was also mortgage-free at the age of 32. 416.450.8538 or email@example.com