In 2017, according to Price Waterhouse Canada, an average Canadian adult spent $1500 on the Christmas season. In many cases, that was money the person did not have, and purchases were put on high interest credit cards that come due sometime the following January.
Christmas has long been portrayed as a time for friends, family and togetherness. For more and more Canadian families it is also a time of shocking over expenditures that put families behind the financial eight ball for months after the festivities are done.
Often the busiest people in January are not retailers, but insolvency trustees who yearly see a big up-tick in their business when holiday shopping bills arrive.
There are many ways for Canadians to be fiscally responsible over the Christmas season, and avoid the “Ghosts of Christmas Past” when their bills come due after the New Year.
Some helpful suggestions include:
1. Set a budget and stick to it.
2. Set 20% of that budget aside to cover the costs of eating out at the mall, postage, shipping, gas and extra holiday food purchases.
3. Limit your use of credit cards to only one or two cards. There are 80 million Mastercard, Visa and American Express cards in Canada, and 91% of Canadians carry at least one charge card. Avoid if possible the retailer specific cards which often charge the highest interest rates of all available cards.
4. Over the Christmas season, cut back on other expenditures like pay-per-view, pack your own lunches and limit your eating out. If adhered to for the six to eight weeks before Christmas, that money saved can be directly applied to Christmas purchases.
5. Limit presents to your immediate family, because if not where do you stop? For extended family, a phone call or a card recognizes that they are important to you at a very reasonable cost.
6. Spread your gift buying out over October, November and December. The debt is much easier to pay in three installments than one.
7. Avoid procrastination and panic shopping, particularly on Christmas Eve. On a personal note, my father worked retail for over forty years and saw more outrageously expensive perfume, cologne, watches and jewelry bought fifteen minutes before store closing on the 24th by those hoping to assuage their guilt of putting off their shopping by buying something they often couldn’t afford.
8. Last, start saving for Christmas 2019 beginning January 2019. A little bit put aside every month will help pay off those troublesome bills when they arrive.
Two shocking statistics regarding Christmas debt come from a study done last year in Great Britain by the government of Prime Minister Theresa May. The report highlighted that 14% of families needed to go to payday loan companies to pay down crushing Christmas debt. The report also stated that Christmas of 2017 wasn’t paid for by an average English citizen until April 23, 2018.
Price Waterhouse Canada concluded their report by saying that to survive the Christmas season with your financial head above water, you need to come up with a plan, stick to a budget and if possible, save for some of the expenditures ahead of time.
Best of luck, and we wish you a sensible shopping season.