Finances are top of mind for Canadians as the holiday season starts, and three-quarters say they’ll draft a budget this year, according to the Festive Spending Snapshot poll from PayPal. Despite intentions to reign in holiday spending, more than half of those surveyed expect they will overspend.
The higher cost of living and prices were the top reasons given by those expecting to overspend. Though inflation will no doubt hurt shoppers in 2023, the spirit of the season tends to overwhelm the financial plans set by many each year.
“Often people will come in after January when the bills come in, and they realize that they have spent a little bit more than they should have over the holidays. And it's either putting them in a position where they fall a little bit behind on other regular expenses, or they just can't quite make the payments that are needed on their cards,” said Stacey Townsend, counsellor lead at Money Mentors, an Alberta non-profit that provides financial education and debt repayment options.
Townsend said when people budget for the holidays, they normally think about gifts and forget to include the celebrations, food, travel, decorations, wrapping paper, and other extras.
“It’s often the little things that I find push people over,” she said. “It's all the frills outside of just the gifts. When we're talking to people about budgeting for holidays, we will say, what else does that include?”
Twenty-four-year-old NAIT student Chanel said she is a planner and starts tucking money away for Christmas months in advance. Even with that forethought, there’s no question as to whether she’ll spend more than she planned this year: “I already have.”
“I’m unemployed and a student, so my budget definitely changed this year,” she said. The biggest cause of her overspending wasn’t inflation, but willpower, she laughed, saying if she finds the right gift, she will ignore whatever per-person spending cap she has set.
Gen Z shoppers are more likely to spend above and beyond their budgets this year, according to the PayPal poll, in part because they want to spoil friends, family, and themselves.
It’s tough to not get carried lavishing the people we love with presents, Townsend admits. With young nieces in her family to buy for, she finds herself excitedly picking up extra little things for them when she’s out Christmas shopping.
“And then that adds to the adds to the expense. It makes you go over because it's just so exciting, right? It was fun to buy all those little extra things.”
Deciding ahead of time what you’re going to buy or establishing a dollar amount you can spend on each person can help protect against these impulse purchases, she said; “Make a list and stick to the list. And take it with you.”
Unlike Chanel, who has already finished Christmas shopping, Helen, a widower from St. Albert, is only just getting started. Without snow on the ground, the holidays snuck up too fast this year, she said.
While the poll suggests many Canadians worry about dipping into savings or piling expenses on credit cards, Helen said she follows a simple guideline to avoid these festive debts. “If I don’t have the money, I don’t spend it.”
Easier said than done for most of us who tap a card at the checkout without a second thought. Keeping your holiday budget in cash can make it easier to track, Townsend advised.
“I know it's been a long time since people have used cash. But using cash to buy gifts really makes it easier to stick to a budget because you physically see it disappear. You actually only have so much to spend, and it's really hard to go over when you're just using cash.”