There’s something about Christmas shopping that throws our rational side out the window.
We know we’re going to make big purchases, but unlike other big purchases in life that we know are coming, we don’t save beforehand.
Instead, we use our credit cards, rack up debt, and then lose track of how much we spent.
Once the new year rolls around and that first credit card statement comes in the mail, the new balance hits us in the face like a cold bucket of water.
The months pass by, we pay off the debt (hopefully), Christmas rolls around, and the same script happens all over again. Strange, but that’s what a lot of us do.
Of course, some people take advantage of Black Friday and Cyber Monday deals. But who wants to go Christmas shopping in November? Where’s the fun in that?
So, here we are again. December. Time to start hitting the stores and buying gifts for the big day.
A recent CIBC poll of 1,512 Canadian consumers between Nov. 27 and Nov. 28 sheds some light on our shopping habits. Those surveyed say they plan to spend an average of $643 on gifts – an eight-per-cent increase compared to last year. Atlantic Canadians plan to spend more on gifts – $827 – but less on things like entertainment and Boxing Day sales – $252 – compared to the national average of $291.
Here are a few more responses. Fifty-two per cent say they will likely go over budget while 41 per cent say they can’t really afford holiday spending. Fifty-nine per cent say they plan to use their credit cards and 50 per cent will use their debit cards. Only 43 per cent plan on setting a spending limit.
So, we’re spending more. We’ll likely go over budget. And, we can’t really afford to go holiday shopping in the first place. Plus, we plan to use our credit cards more and don’t have a spending limit.
This doesn’t look good.
What can we do to curb our spending, keep our wits and avoid going broke this Christmas?
Jeff Schwartz of Consolidated Credit Counselling Services of Canada has some tips.
Schwartz’s first piece of advice is to make a list of the items you plan to buy, bring it with you shopping and stick to it. That way you will be less likely to stray from the plan and buy items not in the budget.
Sounds good. I bring a list anyway, just so I don’t forget what I want to buy. It hasn’t helped me avoid buying items off the list, but maybe this year will be different since I’m thinking differently about my list.
More advice from Schwartz – leave the credit cards home and use your debit card, or even cash if it’s realistic, to make purchases. After all, you can’t spend what you don’t have. Also, track your spending every day to make sure you’re still within your budget.
Although not much fun, Schwartz also says you should shop alone. Family and friends can draw you away from your list and ultimately put you at risk of going over budget. Shopping with others is clearly more fun, but I see his point.
You can use a credit card, Schwartz adds, but be cautious and only use it if you’re able to pay off the purchases in a month or two. If you’re in a position where you can only make the minimum payments, then the debt lingers on and interest will sink you.
Schwartz says using store cards is even worse, especially if there is already a balance. Those cards have a higher interest rate and since you don’t use them every day, it’s easy to forget about them and miss payments.
Schwartz has another idea for Christmas giving. Rather than buying something, do something for someone. Shovel your neighbour’s driveway or put together a photo album for family. It doesn’t cost anything and adds a personal touch. It shows people how much you appreciate them.
I suggest to Schwartz that making presents out of Popsicle sticks might be a good way to save money. But then I realize that I’m not six years old anymore, so that plan might not fly with my family.
So there you have it. Some tips on how to start the new year off right with hopefully more money in your pocket.