You read correctly. Xmas. I am one of those who, barely the leaves fallen from the trees, take great pleasure in organizing the holiday season. Only eight weeks until this magical time of year. And since the 2020 edition took place more under the sign of sanitary instructions than under that of magic, perhaps you feel like me this ardent desire to proceed to a form of catching up and to dream of a worthy Christmas 2021. to move on to… family history? But beware: the thirst for the perfect festivities can lead to dangers to your personal finances.
If you already have a cash budget, you know December is one of the most cash-intensive months. You should therefore already have the necessary savings in the bank for your holiday expenses. “Celebrate now and pay later” is a very bad habit.
Besides, have you ever really done the exercise of preparing a Christmas budget? The results are surprising, and I have observed in my practice that the majority of households do not really take this into account in their annual budget. This practice will be even more relevant this year, because if you like to entertain and fill the household, the increase in the cost of groceries could encourage you to revise your menu.
In addition, various data show that Canadian households are currently in a paradoxical situation. On the one hand, it is said that they would never have had so much savings available following the drop in their consumption during the pandemic and thanks to generous government support programs. On the other hand, it is claimed that they have reached a record level of debt, in particular because of the increase in their mortgage debt.
Rising rates
However, the announcement this week by the central bank of Canada concerning the maintenance of the key rate at 0.25% was also accompanied by important indications: the rate hike will occur faster than expected (in spring 2022) and inflation. is no longer considered temporary. Put bluntly, that means New Years Eve will really cost more this year, and a holiday paid by credit card could hurt many households. Given the real estate rush that marked 2020, all against a backdrop of very low mortgage rates, these statements from the Bank of Canada accentuate potential financial insecurity and will require difficult choices for some.
So I wish us all a different Santa Claus list this year, without excess consumption. It will not be easy to reconcile this desire for celebration with the financial prudence that we should exercise in the current economic context. But I hope you give yourself the gift of investing now – or, in some cases, paying off your debts – what’s left of your COVID savings rather than spending it on trying to have a perfect Christmas.
Festive, but reasonable
What a pooper chronicle, you will tell me! I believe that it is possible for everyone to have a festive holiday season while remaining financially reasonable, and I am giving you some ideas as a gift.
If you haven’t already, draw up your holiday budget. How much money is available and how do you want to spend it? This budget must be respected; the line between thirst for festivities and irrational spending is so thin!
Prepare now list your holiday menu. Cooking yourself is already a source of savings. Take advantage of the sales during your weekly shopping. Avoid impulse last-minute spending.
Remember that what you see on social media does not represent reality. Your New Year’s Eve can be fun and delicious even if it isn’t Instagram or Pinterest worthy!
Prioritize quality over quantity, buy local, and give culture as a gift. Your fond memories of the holiday season are probably more related to grandma’s donuts than to the gifts you received … Here I take off my financial planner hat and I offer you this very simple idea: instead of the traditional exchange of gifts, why not treat yourself to an exchange of testimonials? Each one chooses a name and has the mission to offer in writing or verbally a short eulogy as a gift. Happy memories, discomfort and laughter guaranteed!
Are you a grandparent and want to spoil your children and grandchildren? The best gift you could possibly to offer is the Registered Education Savings Plan (RESP). It may not be unwrapped under the tree, but it will be really useful in securing the finances of your offspring.
At last, explain to the children that this year Santa Claus is overwhelmed because of the shortage of elves and the difficulties of supply. Consequently, they should expect to receive fewer gifts. At home, the strategy worked, which did not detract from the pleasure of my children writing their letter to Santa Claus.