How to keep your holiday spending in check

It’s no secret that people across the country are struggling with balancing their debts, paying their bills on time and trying to save for emergencies or retirement. As a financial counsellor who works with individuals to improve their financial situations, I see all the time how the struggle is real. But saying that you plan on spending less this holiday season and actually putting your money where your mouth is are two very different things. Not only that, if you don’t start taking steps to improve your finances right now, you won’t just be forced to cut your holiday spending this year. You may also be affecting some big financial goals you’ve got for the future—like being approved for a mortgage so you can finally become a homeowner.

You see, every choice you make with your finances, especially during the craziness of the holidays, has a consequence. And I’m not just talking about the further in debt you get, the more money you’ll pay in interest and the harder it will be to pay it all off (although that is true). I’m talking about the further in debt you get, the more it may negatively impact your credit health. This is important because if you find yourself with low credit scores, it will severely limit your options for the future. For instance, did you know that your application for a rental may be rejected because landlords can check your credit scores? You may also not realize that some employers can check your credit before deciding to give you a job offer. And of course, having low credit scores means you may not be approved for a credit card, car loan or mortgage when you want, and the likelihood of you getting the best rates and terms from lenders are slim to nil. 

So, what can be done? How can you avoid sabotaging your financial future, but still have a memorable holiday season? Let’s start with the dreaded “B” word—budget. I don’t know why budgets get such a bad rap, because all they are is a way for you to plan out how you’d like to spend your money. Not only should you have a budget for your day-to-day spending, but a special holiday budget is key to helping prevent you from going overboard. All that means is you should create a list of things you know you’ll be spending money on during the holidays, such as parties, gifts and travel, then decide on the maximum amount of money you want to spend in each category.  

Next, if you don’t already have one, make a debt repayment plan. Create a list of all your debts, their current balances, their minimum payments and their interest rates. Then, decide on which debt to aggressively tackle first: the one with the highest-interest or the one with the lowest balance.

Lastly, give yourself a credit check-up. Check your credit reports and scores to have a clear idea of where you’re at and how far you still need to go.

If all of this sounds daunting, don’t freak out: That feeling is totally normal. Equifax Canada’s survey also found that 39% of the general population have a lot of anxiety about their current debt levels (so you’re not alone!). To overcome this, don’t be afraid to ask for help from a financial professional and start educating yourself further about debt management and how credit works. What I’ve experienced personally, and seen with all of my clients, is that the best way to alleviate stress and build up your financial confidence is by making financial literacy a top priority.

Jessica Moorhouse is a millennial money expert, Accredited Financial Counsellor Canada, speaker, and host of the Mo’ Money Podcast. She is passionate about educating young adults about all aspects of personal finance. This inspired her to found the Millennial Money Meetup—a financial literacy event in Canada—as well as author this article in conjunction with Equifax Canada.

For more educational information from Equifax Canada including legal details, click here.

This article is presented by CIBC Pace It, as part of the MoneySense guide to debt management.