Holidays can be hard on the wallet. It’s easy to get caught up in the warm feelings of the season and overspend. But with a little planning, it is possible to put together — and — stick to a budget you can afford.

If you’re anything like the average Canadian then you’ll likely fork out nearly $700 on gifts this season, according to a 2012 report from BMO. 

Experts warn you could end up spending a lot more if you don’t plan ahead or take advantage of deals. For example, if you use credit cards to finance your Christmas purchases, and only pay the minimum amount due each month, you could still be paying off those gifts new Christmas!

First thing, avoid spending too much.  Easier said than done, right? Well here’s some tips to keep the spending under control:

  1. Budget for holiday spending – Some experts suggest spending no more than 1.5% of your total income on holiday spending. So, set your budget and stick to it.
  2. Make a list – 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. 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.
  3. Create spending limits – Suggest putting spending limits in place that every family member/friend is comfortable with. “Secret Santa” is another good gifting strategy. Rather than buying gifts for everyone, each group 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.
  4. Save first, shop later – Make saving for holiday and family celebrations a year-long monthly commitment. Money spent will be cash on hand rather than credit card debt.
  5. Remember, cash beats credit – One of the best ways to stick to a budget is to pay cash for everything. If it must be a credit card, pay it off on time. The longer it takes to pay off the debt, the more interest accumulates, and this will play havoc with your holiday budgeting…and your New Year’s resolutions.
  6. Don’t wait until the last minute – 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.
  7. Gifts aren’t the only cost – 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, don’t forget to include the cost of other purchases such as wine for friends’ parties and the holiday dinner you’re hosting.

Tip: Another reason to avoid high credit card balances because of out-of-control holiday spending is, if you don’t, you’ll lower your credit score. Spending more than 50% of credit card limits can cause credit scores to drop.

When it comes to the actual shopping, there are some great deals out there if you just know where and how to look:

  1. A way to save is to search for deals, which thanks to the popularity of smartphones and retailer websites is easier than ever. When shopping for electronics, if you tell the store about the deal you’ve found they’ll usually price match it—in some cases they may also take an additional 5% off just to ensure you buy with them.
  2. Another option is to redeem loyalty points for gifts. You can buy almost anything using Air Miles these days, so if you’re not planning to use the points for flying then you might as well get your Christmas gifts for free.
  3. If you are planning to start shopping now then consider taking advantage of Cyber Monday, which is on December 2. Typically on this day you can find huge online savings on everything from clothes to electronics. While some Canadians stores also offer deep discounts and a new BMO poll says that 47% of Canadians will be hunting for deals too the day after US Thanksgiving.  Many U.S. retailers will ship to Canada, sometimes for free, but don’t fret if your favourite store doesn’t. There are several businesses in border cities that allow you to ship goods to their warehouse. You usually have to pay an additional $5 per package, but they’ll give you a U.S.-based shipping address and they’ll hang on to it for you.
  4. Other ways to avoid paying full price include searching for store promo codes online or signing up to company email lists to get sales notices. In fact, Taylor says she’s never paid the sticker price for any holiday gifts. Typically she saves 25% on all her holiday shopping.

However much you decide to spend, make sure it won’t take a year to pay off the credit card. People should be able to pay off their spending within a month or, at most, two months after the holidays.  

Plan, budget and save for a stress-free holiday season!