The holiday season brings a mix of joy and anxiety as everyone tries to figure out how to keep their loved ones happy and treat themselves while avoiding the proverbial “financial hole”.

Create a holiday budget

According to at least one senior banking executive, the key to happy ‘stress- free’ holiday gift-giving is to prepare a budget and stick to it. A budget will give a realistic overview of what is possible and reduce the dread of overspending. This budget should include, but not limited to spends on groceries, gifts, personal items, entertainment, travel, etc. All of this should also be done within the context of your regular financial commitments such as loans and utility bills.

“Oftentimes, we have seen instances in which persons go on a spending spree and after the holidays, they realise that they are coming up short for other critical responsibilities or obligations,” shared Yvett Anderson, district vice-president, retail banking at Scotiabank.

“It’s best to look at the expenses due at the end of December and January. New year expenses might include school fees or other one-time annual expenses such as home or business insurance. Once those are factored in, it’s time to work out how much of the remaining money can be spent on gifts, much emphasis should be placed on setting our priorities right,” Anderson advises. Try to avoid feeling pressured – even by your children or close family – into spending more than you can really afford.

Start planning early

As early as October, major retailers often begin seasonal specials on a variety of items and services. If you plan to purchase gifts or do home renovations in time for Christmas, it is advised that you start planning for them in advance. This will allow you time to peruse the market for deals and savings and can even help you prioritise the areas that will have the most impact long term.

“It is natural for us to get caught up in the festive spirit of the holiday and many persons struggle with the emotions generated about treating a loved one or even themselves to something special vs attending to more mundane expenses,” shared Anderson. “Planning early can really help you to rationalise these emotions in comparison to your income and have a ‘level head’ before spending.”

Carefully consider how you spend that “bonus”

It is customary that at the end of the year several persons receive both expected cash windfalls, such as a company bonuses and unexpected ones, like monetary gifts from friends or family. “One suggestion is that we should avoid using all or most of those Christmas bonuses to ‘prop up’ the shopping budget or for unplanned spending. That money is best used to settle bills, for savings, or used to pay off major or high interest debt,” cautions Anderson. This she says will help persons to feel a greater sense of accomplishment and control over their financial affairs long after the Christmas season is over.

“A bonus can become the gift to yourself that keeps giving if it is invested or spent wisely,” she adds.

Persons are urged to consider investing extra cash at Christmas in a business idea or a savings plan that will benefit you in the year to come.

Be Smart with Your Credit Card

Credit cards are a convenient way to shop and especially useful when needed in an emergency. Many cards on the markets now offer added benefits such as cash back, travel miles and other luxury rewards.

“Credit cards should be used to your advantage during the holiday season. If your card offers a benefit such as cash back, you can safely add this to your holiday spending budget. Now is a great time to cash in those hard-earned points and miles to help reduce your out-of-pocket expenses over the next few months,” Anderson encourages.

The “downside” she said, however, can come if persons do not remain disciplined. If you strategically use your credit cards, you can earn you rewards, protect your purchases and enjoy instalment options for repayment of major purchases. If you do decide to use a credit card, try to ensure that you can pay off the balance when the bill arrives in the new year.

Anderson noted the Scotiabank recently launched a great new payment programme that allows customers the ability to convert large credit card purchases into fixed, flexible and affordable monthly instalments. “For any qualifying transaction, customers have the opportunity to select whether they want to pay in three, six, nine months, or in a year.” This can be a great option for large Christmas purchases like furniture, travel or home appliances.

Be Honest with Yourself and Others

If money is tight, the Christmas season can feel more like an imposition than a celebration. “Remember that everyone is facing challenges, especially as we continue to recover from the impact of the pandemic. Try to normalise conversations about money and be open about matters of financial well-being,” she advises. Talk to your loved ones about avoiding a gift exchange or minimising how much you spend. You don’t have to give them all the reasons why – just enough so they understand.”

This holiday season choose to focus on what and who you have, rather than on what’s missing. There are countless ways to enjoy Christmas and the holiday spirit without burying yourself under mountains of bills.