How to manage your holiday budget (without stressing out)

Being healthy doesn’t mean just being mentally and physically fit, but financially as well. While there’s typically lots to look forward to during the holidays, it can also tend to be more than a little daunting wallet-wise and can certainly take a toll on our stress levels.

Finances can have a significant impact on our physical and mental health, with the ability to disrupt many areas of our lives if we aren’t careful. In fact, 48% of Canadians have reported having trouble getting a proper night’s sleep due to financial worries¹, and 44% are unable to properly take care of their financial responsibilities if their paychecks arrive later than expected¹. So, how exactly does financial stress affect us? Struggling to balance the checkbook can lead to everything from an increased risk of anxiety and depression, tension within personal relationships, headaches, muscle pain and numerous other problems related to elevated stress levels. 

For Dialogue’s Chief Financial Officer, Navaid Mansuri, budgeting has always played an instrumental role in his financial wellness throughout his life, both personally and professionally. Navaid has always believed that the hallmark of a good budget lies in maintaining a fine balance of challenging yet attainable financial goals, with sufficient flexibility built into it to deal with unexpected surprises. A budget should be used as a guiding light towards your personal financial goals, to allow you to have the best quality of life while remaining within your means, and over time, ultimately giving you more financial freedom.

While the upcoming holiday period is a time to rejoice and relax with friends and family, it’s key to be equipped to handle the inevitable financial responsibilities that come along with it. Check out the budgeting tips our CFO recommends below – we hope they’ll help you stick to your budget and lessen your stress this holiday season.

Holiday budgeting tips

• Plan your cash flow for the first few months of 2024

Plan your cash flow for the first 2-3 months of the new year (income, expected expenses, savings) to determine your “disposable cash”. This step will then allow you to develop your holiday budget.

• Develop a holiday budget based on 2024 cash flow

Based on the amount of disposable cash you determine will be at your disposal, develop a budget for holiday spending. This means taking stock of your gift list (don’t forget the stocking stuffers), holiday cards, decorations, and of course, holiday party expenses (meal prep costs, alcohol, desserts, etc.).

• Stay disciplined, and stick to the budget

Do your best to spend strictly according to budget, and it’s always safer to pay with debit or cash. If you use credit cards, set aside the money to pay off the full balance before you get your statement. If you can be disciplined, using a credit with rewards such as cash back can be advantageous. If you spend $2,500 a month, most cash-back cards will earn you between $300-400 a year (enough for a couple of nice holiday gifts) in cash back just for paying for things that you need anyways (e.g. telephone and internet bills, groceries, etc). If you do this, make sure to find a card with no fees.

• Don’t forget the RRSP!

Do not forget to plan for RRSP contributions by the end of February to allow you to get the tax deduction for the previous year. Contribute the maximum amount that you can to maximize your tax savings (up to your individual dedicated limit, as found on your previous year’s notice of assessment). Most banks also offer loans to make RRSP contributions, which you can pay off when you get your tax refund.

• Create a rainy/snow-day fund

You never know when you’ll need to dip into an emergency savings fund to cover unanticipated expenditures. Create a savings account (or TFSA) to make sure that you’re covered for any unexpected holiday (or other) costs or changes in your employment. In any case, you’ll have a solid snow-day fund to rely on if need be!

We hope that these professional tips will help you stay on track with your spending during this gift-giving time of year. From all of us at Dialogue, we wish you a happy holiday season!

Sources

¹https://www.canada.ca/en/financial-consumer-agency/services/financial-wellness-work/stress-impacts.html