Ask the Expert: How to avoid breaking the bank this holiday season

With inflation and economic uncertainty weighing on shoppers, there are several strategies Canadians can deploy to save this holiday season. (THE CANADIAN PRESS/Darren Calabrese) (The Canadian Press)

As economic uncertainty abounds, Canadians want to save a few dollars this upcoming holiday season.

A recent survey from Deloitte Canada shows Canadians intend to spend $1,347 on the holiday season this year, down 11 per cent from a year ago. Among other items, Canadians intend to spend less on charitable donations, gifts and gift cards this year, the survey found.

This comes as a separate report from the Retail Council of Canada shows a whopping 88 per cent of Canadians plan to use proactive shopping tactics to save money, including looking for deals (52 per cent), shopping early (41 per cent) and keeping a budget (40 per cent).

These are among the most effective ways to keep holiday spending in check, according to Alim Dhanji, a certified financial planner with Assante Financial Management Ltd.

“With inflation as it is, it's important to be a lot wiser with your money, now more than ever,” he told Yahoo Finance Canada in a recent phone interview.

“Setting expectations with your family and friends is important and taking advantage of the opportunity today to really set that expectation if you have financial constraints.”

Yahoo Finance Canada spoke to Dhanji and with Kevin Cork, a certified financial planner at The Absolute Group/Investia Financial Services, to discuss some of the best ways to avoid breaking the bank over the holidays.

Start your holiday shopping early

Both experts agree getting started early is crucial, in part because the best deals happen well in advance and because you avoid the last minute stress-shopping that can spiral out of control.

“You don't want to get caught up in that hype, that last-minute shopping, and trying to keep up with everybody else,” Dhanji said.

“At the end of the day, if you overspend during the holiday season, and you have a lot of credit card bills come January, February, that's going to derail you from your most important financial goals.”

Dhanji added starting early gives you time to compare prices and look for discounts to make the most of your budget. Cork also said early shoppers have time to think of meaningful gifts, rather than picking up last items that are still available.

“We end up spending $200 on something just because you're stressed and tired, and it's the 24th,” he said.

Develop a holiday shopping budget, and consider cash

Dhanji and Cork suggest laying out a budget before the holiday shopping begins and sticking to that budget.

“Develop a comprehensive budget that prioritizes basically your essential holiday expenses, and ensure that it gives you a clear roadmap from a financial perspective,” Dhanji said.

“Everyone should do this well before the holiday season is underway, because once it gets started, then you're behind the eight ball.”

If you don’t want to create a holiday budget, Cork suggests taking out the money you’re comfortable spending in cash, and paying only in cash. This strategy ensures you don’t go over budget.

“One of the biggest dangers around any kind of spending any time of the year is using the debit card, the credit card, the tap, because the impact doesn't hit you, versus counting out the twenties,” he said.

“It brings home the significance of the money that's being laid out, because you can literally see the twenties.”

Try low cost, alternative traditions

Secret Santa, potluck gatherings and parties at home are all effective ways to make the holidays fun, while remaining mindful of spending.

“The key thing is keeping the focus on the important stuff, rather than the dollars being spent,” Cork said.

Cork said his family has a tradition of a “no money Christmas” with family members over the age of 16, meaning all adults receive gifts that don’t cost a dime.

“One year, I received the gloves that I had left at their house, like a month before,” he said. “(My mother-in-law) had wrapped them up, put them in a box, all very fancy, but they were my own gloves.

"You still have a turkey, you still have a bunch of people gathering, there’s still drinking and arguments and all the traditional stuff, but she shifts the focus.”

On top of the no-money gifts, Cork said his family usually adds in a charitable donation and the family then takes the time to discuss why they chose a particular cause.

Ben Cousins is a freelance journalist based in Toronto. Follow him on Twitter @cousins_ben.

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