Every year people spend hundreds of dollars on gifts for their loved ones, while trying to make sure their budget balances. This time of year – while filled with love and holiday cheer – can also cause a lot of stress for people from a monetary perspective.
Gifts become far too lavish and the season of giving turns into the season of who can give more. This can spiral into a chronic overspending nature for many individuals that don’t have the luxury to do that. The post-holiday season means opening up those credit card bills and trying to reconcile the damage that’s been done. It’s all too easy to get carried away with your credit card during the holiday season.
A survey by Abacus Data finds 60% Canadians don’t carry a balance on their credit card. But for those that do, many of them face interest charges of 20% or more annually. This astronomical charge can be a huge financial obligation on families and individuals, making it harder for them to pay down their bills and become debt-free. While some people may be able to negotiate with their credit card companies for a lower interest rate, a lot of credit card companies aren’t going to give you the 3% rate you’re hoping for. In situations like these, it’s best to aggressively pay down your debt and ensure that come the holidays you aren’t carrying a balance in the new year.
The best way to mitigate the post-holiday season credit card blues is to save up ahead of time. While it seems simple, it’s a concept that many people forget, or don’t think about far enough in advance. Since it’s November, now would be a great time to start dreaming up a list of potential gifts you want to buy for your friends and family. It’s important to be specific, decide what you want to buy, and find out how much the gifts will cost. If the list ends up looking like it might be out of your price range, it might be time to reconsider. Try making your holiday gifts this year. Perhaps you can send your loved ones home with a box of homemade delights.
Once you’ve decided who you’re going to be buying gifts for and how much you’ll be spending, it’s time to start saving. Open a savings account just for your holiday spending and start socking money away each week leading up to the holiday. Even if it’s just $50 a week, by the time that bill is due you could have $250 in your account to offset the charges on your credit card. If you save for your purchases in advance you’ll quickly and easily be able to transfer the amount in your savings account to your credit card with no pain involved.
Starting the new year on the right financial foot by ensuring you aren’t racking up any credit card debt at the end of the year is the best way to ensure that you will be successful with your finances. Taking control of your spending habits and being responsible during the holiday season is important. You don’t have to skimp on every gift you purchase, you just have to save up for your purchases first. Your future self and bank account will thank you.
Flickr: Craige Moore