How much do you plan to spend on holiday gifts this year? If you’re anything like the average Canadian then you’ll likely fork out $1,104 on gifts this season, according to PwC’s 2020 Canadian holiday outlook report. That’s nearly a third less than we spent last year ($1,593), but experts warn you could end up spending a lot more if you don’t plan ahead or take advantage of deals.
When it comes to holiday shopping, people always make costly errors, says Kendra Silvertson, a CFP with Vancouver-based Sora Group Wealth Advisors. Waiting until the last minute, for instance, is the classic money-draining mistake. In many cases, the gift you wanted to buy is sold out so you end up spending more on something else. “People say, ‘I’ll just grab something,’ and that costs twice as much as what you expected to spend,” she says.
Most people have no clue how much they should spend on gifts, she adds. They simply walk into the store and pick whatever looks good without understanding how that purchase will impact their finances.
Another common mistake is only tallying up the cost of gifts while forgetting about the rest of the money that typically gets spent over the holidays. While keeping a running tally of gifts is important, says Silvertson, don’t forget to include the cost of other purchases such as wine for friends’ parties and the holiday dinner you’re hosting.
Tips to slash your spending
With a little work, it’s can be fairly easy to keep spending in check. The first step, says Silvertson, is to create a list of all the people you think you will need to buy presents for and then decide if you really do have to get them a gift or if a card suffices.
For those people you are buying for, write down how much you want to spend on each person. Creating a list not only forces you to develop a shopping plan, but it helps you see if you’re on budget.
Kerry Taylor, the author of 397 Ways to Save Money and the popular Squawkfox personal finance blog, suggests putting spending limits in place that every family member is comfortable with. “I wish more families would get with the limit,” she says. “It makes so much sense. But people are too afraid to talk about money.”
“Secret Santa” is another good family gifting strategy. Rather than buying gifts for everyone, each family member picks one person to a buy a present for. Everyone gets one great gift and no one’s left with a massive credit card bill.