Six ways to enjoy holiday shopping despite inflation
Inflation. It’s been a hot topic for most of 2022, and as we head into the holiday season it is top of mind for Canadians more than ever.
In a poll by Equifax Canada conducted in November, 60% of respondents said they will be spending less on gifts this year because of financial pressures related to inflation.1 The pollster also spoke to over 300 small business owners, and only a quarter of the respondents said they felt more confident about the coming holiday shopping period compared with last year.
If you are feeling a bit of a financial squeeze from higher prices and are wondering how you will be able to buy presents for everyone on your gift list, there is hope. Let’s take a look at a few of the ways you can cut back on your spending while still enjoying the holidays with family and friends. Read on for some tips about how to save money this time of year.
Set a budget.
If you’re stressed about setting a budget, don’t be! Setting a budget is a great start to keep your holiday spending in line, be realistic and minimize surprises. Figure out what you can afford to spend, figure out whom you need to buy gifts for, and then divide the amount among the people on your list. Remember, this could entail some hard choices, as many people buy gifts not only for their families but also for friends, co-workers and teachers.2
Also, consider that it’s not just gifts you’ll be spending money on. Are you travelling during the holidays? Airfare and gasoline have experienced some of the highest rates of inflation. So how much you spend on these things should be top of mind when budgeting. Food is another important budget item. Big, elaborate meals are a tradition for many during the holidays, so keep an eye on that when it comes to how much you can afford to spend.3
Thoughtfulness over expensiveness.
“It’s the thought that counts” is a cliché for a reason. When planning your gift list, spend a bit more time thinking about what to buy. Thoughtful gifts can be worth more to loved ones than overly expensive ones. Examples include baked goods or artwork, or something you know the person receiving the gift has been trying to find for a long time.
Shop the sales.
If you want to stretch your dollars, do your research to ensure you’re not overspending. Watch for sales to find the best deals possible. And don’t forget to take advantage of reward points you earn on debit or credit cards throughout the year. Cashing those in during the holidays can save you a lot of money. Lastly, buying decorations and wrapping paper at discount stores can help you avoid paying marked-up prices.4
Gift exchanges are the way to go.
For people with large families and groups of friends, gift exchanges can help keep your spending down and make festive gatherings more fun. There are numerous websites, such as Elfster, that you can use for free to set up a “Secret Santa” exchange. Potlucks can also add to the holiday spirit, while ensuring no one gets stuck with a massive grocery bill.
Don’t be afraid to talk about it.
It’s likely that many people you know are also hoping to save some money this holiday season. So speak up! It can be difficult to talk about money. However, having conversations about cutting back may make you realize your extended family and social group is facing similar spending issues. Make saving money during the holidays something everyone is involved in. If you are all in similar situations, then nobody has to feel singled out when it comes to spending concerns.5
Be aware the dangers of holiday debt.
It’s easy to get carried away during the holidays. Charging a bunch of gifts to your credit card and making monthly payments may seem reasonable at the time. For example, if you charge $2,000 to a credit card at an interest rate of 18%, the minimum monthly payment is only $50. But it would take you five years to pay off that balance if you only make the minimum payments.6 If you do that a few years in a row you will quickly find yourself in a debt spiral. You don’t want to be factoring interest expenses into your future holiday spending plans. And building up debt in this manner can start to affect other long-term savings goals such as retirement.
Prices are rising, but that doesn’t have to put a crimp in your holiday planning. Make a budget and stick to it when buying gifts. Also, remember to factor in budget room for items such as travel, decorations and food. And most importantly, avoid going into debt to fund your holiday season spending, as that can have serious long-term consequences. And enjoy the things that don’t come with a price tag, like the company of friends and family!