Personal Finance » Spending

Managing your holiday spending

Managing your holiday spending

“Buying something at a discount is only a ‘deal’ if you wanted it before you went to the store!” – Brian Milton

Whether it’s Black Friday, Cyber Monday or just a day that ends in ‘y’ there seems to be a myriad of reasons for retailers to slash prices in order to tempt us into spending, and a vast number of “deals” that are just too good to resist.

However, just like so many things that seem “too good to be true” sometimes those unplanned purchases leave us with a heaping of buyer’s remorse (and some seriously inflated January credit cardbills). It’s a retailer’s job to create a desire for a product and to make it as easy as possible for us to purchase it. As smart consumers, we need to be aware that we’re being sold at every turn and that, because the anticipation of pleasure is far more addictive to our brain than the realization of pleasure, it’s hard for us to resist making purchases on impulse.

Avoid emotional spending

Every decision has two key influences: the logical influence and the emotional influence. The challenge with holiday spending is that it tends to be emotionally biased. We justify purchases with reasons like:

“Christmas only comes once a year.”

“It’s more about giving than receiving.”

“That person has been really good to me, I want to get them something special.”

“I’ll figure out how to pay it off later.”

These emotional justifications can be a recipe for financial disaster so, if you know that December is traditionally a month for big spending, be careful about getting carried away.

Holiday season = big business

For retailers, the period between Black Friday and Christmas is the busiest of the entire year. Anyone who’s turned on their TV, checked their email or walked past a retail store in November and December is likely to have been bombarded with festive images and sale signs, promising huge discounts on everything from socks to big-screen TVs. With 30% of retail sales occurring during the last four weeks of the year, it’s no wonder that retailers are keen to lure us in and entice us to spend wildly on everything they have to offer.

Psychologically, shopping gives many people a lot of pleasure. If you’re not fazed by the crowded stores and overflowing parking lots then there’s something quite festive about wandering around in a warm, well-lit space, when it’s freezing cold outside while we pick out gifts for those we care about. Even if you’re more of an online shopper, the same can be said for sitting at your computer in your pajamas, with a glass of festive cheer and your credit card. The trouble is, that nice warm space and generous mindset often lead to us spending far more than we intended to.

Keep spending in check

With the average holiday spend estimated at $805 per person, author, and marketing consultant, Martin Lindstrom suggests that, if we want to avoid overspending, we should try the following:

  1. Don’t bring your kids shopping with you; studies suggest they’ll help you spend 29% more than your budget.
  2. Don’t shop with your partner; you’re likely to spend 19% more.
  3. Don’t use a cart; people who carry their stuff spend 8% less.
  4. Pay cash and carry $100 bills; you’re less likely to break them for smaller purchases.

Related article: Do you have a disciplined spending plan?

Develop a holiday spending plan

According to a study by Interac, two-thirds of Canadians will set a holiday budget for this year but the bigger question is, how many of those people will stick to their budgets? We live in a world where it’s easier to overspend than ever: how many times have you walked into a grocery store (or any retail store) with a list of things to buy and walked out with MORE than you planned?

Interestingly, in the same Interac study, the overwhelming majority of those people polled said they would go beyond their budgets if they were to find the perfect gift for their spouse or partner (90%), child (87%), parent (83%) or themselves (74%).

I hate to be the one to break this to you but, if you’re setting a budget and then blowing it, you’re not actually budgeting! Budgeting means planning ahead and being aware enough of your financial situation to resist spending more than you can afford. (Even if your favorite retailer insists it’s the ‘deal of the century’!)

Be careful of self-gifting

Self-gifting is a really common way to blow your holiday spending budget. One minute you’re looking for gifts for others and the next you minute you find a great winter coat on sale for $99. You try on every color available, find one you love and, hey presto, you have a new winter coat… it’s a Christmas miracle!

How many times have we done this? Bought ourselves an unexpected gift when we were really supposed to be buying gifts for others? According to that survey from Interac, more than one-third (35%) of Canadian holiday shoppers will be buying gifts for themselves (and 74% are willing to go over budget if they find the perfect one): that’s a sure-fire way to blow a budget!

Watch out for the credit card hangover

Recently, at a social function, a stranger shared a money story with me. He talked about buying his significant other a big screen TV but in the same sentence told me that he had no money. However, he had a friend who worked in a large electronics store who could get him a deal on a 60-inch big-screen TV. The regular price on the TV was $1,229.99 but the friend could get it for him for only $988, a saving of $241.99. Not wanting to miss out on this “once in a lifetime” deal, he charged it to his credit card.

Like many of us, he thought he was getting a bargain but in reality, he’d just committed to paying way more than he planned because he charged it to his credit card with no plan (or ability) to pay the balance off when his next statement comes in. Let’s look at the numbers:

  • If he makes minimum monthly payments, it will take him about 11 years and 5 months to pay off the TV and the total cost of the TV will be $2,075.
  • If he pays off the purchase in 2 years, the total cost of the TV will be about $1,223 (which is basically the regular price).

This means that the longer he takes to pay off the cost of the TV, the worse of a deal it becomes. The moral of this story: if you’re using a credit card to pay for something you can’t afford to pay cash for, it doesn’t matter how great of a ‘deal’ it is; it’s going to cost you way more than the discount in the long run.

Related article: 5 ways to pay off your credit cards

Make a list. Check it twice!

From my perspective, managing our holiday spending relies on the same principles that we use to manage our usual monthly spending: have a plan and follow it! The song tells us that Santa makes a list and checks it twice and that’s a good place to start. Knowing who you want to shop for and how much you intend to spend helps you determine what you can buy. Whether you prefer to shop in person or online, it’s important to know your budget limits and to stick to them in order to avoid a January ‘spending hangover’. My love of gift buying means that I’ve run myself into all kinds of trouble: usually as a result of either buying too much for one person, or going over budget on one person’s gifts and then feeling as though I have to buy extra for everyone else to make it “fair”.

One way to avoid this is to resist the temptation to make too many spontaneous purchases. Retailers know that the human brain gets more excited by the thought of buying something than actually owning it. This is why they arrange the stores and gear their marketing to making customers feel as though, if they don’t buy right that second, then they could miss out. In truth, if you wait 24 hours after seeing that “must-have” gift to actually buy it, there’s a good chance you’ll change your mind (which saves you money!) and, if you do decide to go back 24 hours later, it’s highly likely that the “must-have” item will still be there.

Shift to thrift

Another way to reduce spending is simply to cut back on your list. For many Canadians, high levels of consumer debt combined with a weaker dollar and slowing economic growth have led the Conference Board of Canada to predict a “Scrooge-like” Christmas season for many retailers. A lot of people are planning on spending less this year so, if you have people on your list who you don’t really want to buy for, chances are they’d welcome the opportunity to save a little money by not buying you a gift either! In our family, we have an agreement that the adults-only buy gifts for the kids not each other. My friends and I make plans for dinner or a movie rather than buying each other presents and my siblings and I make an effort to spend time together when I go home to England rather than spending money on Christmas gifts that we don’t really need. Not only does it make Christmas shopping a whole lot quicker and easier but no-one misses the gifts on Christmas Day and we enjoy having an excuse to spend time together after the craziness of the holiday season is over.

Related article: Is it trendy to be frugal?

At the end of the day, the holidays are a time for giving but that doesn’t have to mean spending a lot of money. How much you spend (and who you spend it on) is entirely your decision. Whether you love to buy extravagant gifts for a large number of people or prefer to make special gifts for a select group doesn’t matter as long as what you choose to spend makes you happy, fits with your budget and doesn’t leave you with a credit card “hangover” in January.

The magic of gift certificates

Anyone who knows me well knows that I’m not a big gift person: I love to buy them but I’m not especially excited about receiving them. However, gift cards are the one exception. I love gift cards because they give me an excuse to treat myself to things that I might not necessarily splurge on. Nowadays you can get gift certificates for so much more than just retail stores which can make them creative rather than boring gifts. I’ve given gift certificates for beginner flying lessons, hotel stays, family photo sessions and even studio time for an aspiring musician. They were all really well received. Gift certificates can also be a great way to gift your time – offering to cook dinner for a friend, or to babysit so that they can enjoy a night out, are gifts that don’t cost anything but are often appreciated far more than something you can buy in a store.

Pay it forward

In this season of spending, there are also plenty of opportunities to “re-direct” some of your gift budgets to others. As I mentioned above, I’m not really a gift person but my husband loves to buy presents so, over the past few years, I’ve been actively looking for opportunities to ‘share’ my gifts by re-directing some of the money he was planning to spend on me to others. For the past few years, we’ve bought gifts for older teens living alone through a holiday sponsorship program run by a local non-profit. In many malls, you can find a “tree of angels” set up where you can buy a gift for a child (or a senior) who might otherwise have nothing. There is also plenty of toys (and food) drives this time of year run by organizations that will be more than happy to connect your donation with someone who will truly appreciate it. For me, there’s just as much joy in making sure someone else has at least one gift under their tree as there is in adding to the gift pile under my own. Lots of charities offer ways to help others during the holiday season and it can be a great way for friends, siblings, and co-workers to share the spirit of the season and benefit others.

No matter what your faith or cultural traditions, the holiday season is traditionally a time of giving. While our favorite retailers would have us believe that this means spending vast amounts on expensive items, the reality is that you can show how much you care about someone in a multitude of ways and not all of them have to involve spending money or spending hours in crowded stores (or online) trying to find just the right thing. If you love shopping then I’m the last person to suggest you shouldn’t but, if you’re looking to simplify your gift-giving this year, it might be worth considering some alternative ways to show you care.

Related article: Giving to your favorite charity

Season of giving, not spending

In this “season of giving”, giving doesn’t have to mean spending. We can give time, trade skills and have fun without spending a penny if we choose to. The spending has become a habit (encouraged by generous marketing campaigns) but it’s not the heart of what this time of year is about. However, when you live in a society that seems to measure love in dollars spent and places so much value on accumulating “stuff”, it can be hard to remember that spending isn’t at the heart of the season.

Christmas spending or making memories

In truth, the real spirit of the season is found in sharing the gifts of time and making memories with the people who matter most in our world. We buy into the myth that, without a beautifully decorated home, a fridge that is overflowing with food and a big pile of gifts under a stunning tree, we are somehow depriving the people we love of the true festive experience. In reality, when we look back on our own childhood memories of Christmases past, there’s a good chance that the most treasured memories involve the experiences of the season rather than the gifts. I know that I can only remember a very small percentage of the gifts that I received as a child (and some of them I remember only because they were so awful I can’t forget them!). However, I do have a ton of memories involving hanging out with my family and friends, staying up late and enjoying the fact that my dad had two or three days off work.

Related article: Can money buy you happiness?

This year, why not focus on finding ways to make the season special for those you love without committing a huge amount of money to Christmas spending? It might not make your favorite retailers terribly happy but you may be surprised at how it increases your enjoyment of the holiday season.

How do you manage your holiday spending? Do you find yourself under pressure to buy for people or have you found a way to cut back on your list? Maybe you’ve found a creative way to give gifts that don’t cost a lot but bring a lot of joy. Let me know, I’d love to hear from you.


  1. Jess @ Best Credit Cards Canada

    I am with you! For us, it is all about having a list and then looking for the sales for only those specific list items. I was organized this year and actually was able to get most of my shopping done during a Black Friday online sale. I couldn’t believe it. I actually got the things I was looking for and at a great discount 🙂
    We also try to limit the gifts and only buy for the children in our families. The adults in the family are all trying to get rid of clutter, not add to it! Lol!

  2. Ruth

    This year we cut the shopping by half. We have just a present something simple and only 1 presents for the rest of my kids. Also my parents and brothers only 1 and I have a budget this time. I am getting almost done. the best, I am under budget…

  3. Karthigan Srinivasan

    Don’t go shopping when you are hungry, no matter what you intend to buy. As you suggest, make a list and a budget and stick to it.

Leave a reply

Your email address will not be published. Required fields are marked*