CALGARY, Dec. 10, 2013 /CNW/ - If your holiday shopping habits put you
on the naughty list for overspending, impulse buying, and losing track
of your purchases, you may be facing a post-holiday debt hangover in
the new year.
With just over two weeks left before Christmas, the malls are filled
with last minute shoppers scrambling to find the perfect gift.
Financial experts sound off on how to avoid the most common pitfalls
that can cause finances to spiral out of control during the peak days
of the holiday shopping season.
No plan / budget
Make a list - and check it twice! Without a plan or budget in place,
people overspend as they have no idea how and when to limit purchases.
This causes havoc for finances when the bills pile in.
"Ideally, to avoid holiday over-indulgence, a budget should be prepared
well ahead of time," said Ambreen Sulman, a Certified General
Accountant (CGA). Even with the festive season in full swing, it's not
too late to make a plan for last minute purchases and still keep your
spending in check. "Making a list of all the things you still need will
help you avoid buying on impulse." A budget also forces you to think
twice about an item - do you really need to buy your toddler-aged
nephew three more expensive toys? How many cute mitts and scarves does
one really need?
Don't shop without doing your homework, adds Sulman. "Look at different
stores for competitive pricing or search online. This allows you to
easily compare prices at different retailers in the comfort of your own
home while limiting your time at the mall, lessening your chance of
Forgetting to track every dollar
With all the gifts, dinners and special events surrounding the holidays,
it's easy to get carried away and overspend.
Do you know how much you have spent on the holidays so far? If you
haven't tracked your purchases, it's not too late. View your up-to-date
statement online or, if paying cash, make a list of your holiday
expenditures to date. Chances are you may be surprised by how much you
have already spent. Finding out you are over-budget now can give you a
reality check before you are tempted to spend more. "Be detailed,"
said Manfred Grunling, CGA. "Include the cost of cocktails at the
office party, the added cost of hosting a holiday dinner, and the
little things like wrapping paper, bows, gift bags and stocking
stuffers," he said.
Racking up the credit card
Leave the plastic to Santa and his toys! It's easy to lose track with
every swipe and forget about the cost of your purchases until the
January bills come around. Unless you pay off your entire balance in
full, you're paying a high interest- making holiday shopping even
costlier. Grunling advises to leave the cards at home and only pay
cash. "Parting with cash is much more difficult than simply swiping a
card," he said. "Look at your list and withdraw only the cash you need
before you go shopping." Grunling also suggests to stay focused and
stick to your list and budget. "Limit your shopping time in each
particular store. Know what you want to buy and from where. Always be
aware of return policies. If you do buy something on impulse and
change your mind the next day, can you return it?" he said.
Going to the mall to get into the holiday spirit
Whether you are heading to the mall to get kid pictures with Santa or
meeting a friend for a latte and window-shopping to the tune of
Christmas carols - the mall is a costly place to be. Even with all your
gifts purchased, you may be tempted to buy extra things, be influenced
to spend more if with an extravagant friend or take advantage of a
sale. "Holiday sales tend to highlight the fact we are saving money,
but most likely we are just spending money on item we don't really
need," said Sulman. "We are all guilty of impulse purchases and these
magnify in the holiday season. Where the mood is festive and the malls
are overcrowded, the jovial mood of the holiday season beckons us to
spend a few extra bucks in exchange for happiness," she said.
Not setting boundaries
If you're on a tight budget or have a lot of people on your gift-list,
have a chat with friends and family and set price limits to lower
expenses. "Let them know that you are on a budget, suggest drawing
names or host a potluck instead of buying gifts," advises Eva Nong,
CGA. Don't overlook the importance of spending time with loved ones to
get into the holiday spirit. "There are many great ways to spend time
together that are affordable or all together free," she said. "Enjoy
activities such as skating, sledding, holiday festivals or going for a
walk and viewing Christmas light displays."
"Don't let money control you or your feelings," adds Jeff O'Rourke,
CGA. "Spending time with friends and family is what's important - the
holidays are not meant to drive people into debt that they will have to
work hard to pay off in the new year."
Skipping home-made gifts
Some of the best gifts are not costly, but thoughtful. "Handmade
certificates for movie nights at home, homemade baking and special
photos are just a few easy ideas," said Grunling. "For entertaining
and Christmas dinners, consider starting a tradition of sharing special
dishes. Whether it's that superb salad or the perfect pie, sharing the
cooking duties takes a lot of pressure off the hosting household. And
don't forget about crafts - whether it's handmade tree ornaments, gift
baskets, advent calendars or a candy-case vase, the list is endless,"
Adopting the "I'll pay it off in January" attitude
O'Rourke says most people will not be able to pay off the large credit
card bills all at once in January. "This will result in added stress
and costly interest," he said. "While we are in the holiday spending
spirit, it's easy to put off thinking about how difficult it will be to
pay down the debt. People have to remember that come the new year, they
will have to make extra payments to pay off their holiday spending, on
top of regular cost-of-living expenses." O'Rourke advises to resist
impulse purchases and to remember it takes a lot of time to make and
save money, but seconds to spend it. "Make sure you don't hurt yourself
financially in the future," he adds. "Your holiday shopping habits
could put you at risk of not being able to afford the necessities or an
emergency in 2014."
These holiday tips are brought to you by the Alberta Accountants
Unification Agency. In Alberta, the Certified General Accountants, the
Certified Management Accountants and the Institute of Chartered
Accountants of Alberta are working toward unification under the new
Chartered Professional Accountant designation. Find out more at www.albertaaccountants.org.
Image with caption: "Bad shopping habits can lead to a post-holiday debt hangover in the new year. (CNW Group/Alberta Accountants Unification Agency)". Image available at: http://photos.newswire.ca/images/download/20131210_C9435_PHOTO_EN_34805.jpg
SOURCE: Alberta Accountants Unification Agency
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Manager, Public Relations
Alberta Accountants Unification Agency