We know – it’s not even mid-September and the stores are full of Halloween decorations and costumes. It seems a bit premature to be thinking about everything pumpkin spice, so why even bother thinking about Christmas? Well, when it comes to our finances, it’s always best to plan ahead as far as possible. And that’s true when it comes to annual events that tend to shock our monthly budgets.
We’ve all been there: Just after the Holidays end and we return to work, the first few credit card statements start trickling in.
“I didn’t spend that much, did I?” you think.
“Well, there’s nothing I could have done to avoid this overspending,” you then think
Yes, there was.
Plan now to minimize stress
It might seem daunting to start thinking about the holidays this early in the year but, as mentioned, doing so will help minimize financial stress during – and after – the holiday season.
One thing you can do today, which will go a long way in helping you fund holiday expenses, is to add a new savings category to your budget specifically for that time of year. For example, there are, for most people, seven more paycheques to be earned before Christmas.
That’s seven opportunities to stash some cash for presents, events, and other expenses you might be responsible for this winter.
Say you dedicated $100 from each paycheque to a new holiday budget category. That would give you with $700 by the time Christmas comes along and you’ll be burdened with additional costs.
Make your money work harder
OK, so you’ve decided to go the savings route now so you can avoid relying on credit cards come December. Great. Where should you be keeping the money?
While some (probably many) simply stash extra cash in a jar at home or a chequing account, that excess capital won’t be doing much for you. Instead, you could put it in a high-interest savings account to earn a little extra money.
Right now, the best high-interest savings account rate is 2.3%, which is offered by EQ Bank.
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If you want to even more interest (and if you have more time to save), GICs offer great guaranteed returns. The best one-year GIC rate is currently 3% — not bad for a guaranteed investment.
However, a GIC savings plan won’t work this year since there isn’t enough time between now and when you will need to withdraw the money to cover Holiday expenses. But keep them in mind if you plan on starting to save for next year’s holiday expenses.
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Make use of points
Along with a savings plan, you can supplement some of your holiday spending with credit card points. If you plan on travelling during the holidays, a travel rewards card can help you earn points toward flights and hotels.
Alternatively, a cash back credit card will allow you to put money (up to 5%) directly back into your own pocket – just by using it.
Remember, though, to fully take advantage of rewards programs, you’ll need to pay off your credit card bills in full to avoid having to pay interest.
The holiday season can be stressful for plenty of reasons. However, a little bit of forethought and planning can you help you minimize the financial stress, allowing you to focus on family, friends, and merriment during the holidays.