The holiday season often brings joy and celebration, but it can also lead to financial strain, especially for those already juggling credit card debt and debt repayment. With the pressure of gift shopping, hosting family dinners, and other holiday expenses, many Canadians are finding it difficult to stick to their budgets. According to Equifax Canada, a significant portion of consumers plan to reduce their holiday spending due to the financial impact of inflation and existing debt. This time of year doesn’t have to lead to a debt hangover, though. By being strategic and sticking to a well-planned budget, you can enjoy the holidays without derailing your debt repayment goals.

Here are some practical tips to help you manage holiday spending while staying on track with your debt repayment.

1. Stick to Your Debt Repayment Plan

Even though the holidays are often an expensive time of year, it’s crucial not to abandon your debt repayment plan. Skipping payments or delaying debt repayment might seem tempting, but it can lead to even more stress in the future. To maintain financial success, you need a realistic budget that you can follow, especially during the holidays. Calculate your income for the month and list all of your essential expenses—rent, utilities, groceries, and, of course, debt repayments.

Once your essentials are covered, allocate any remaining funds to holiday spending. While holiday meals and gifts can add up, consider reducing spending in other categories, like work lunches or school supplies, to free up extra cash for holiday costs.

2. Create a Detailed Christmas Shopping Plan

A key strategy for staying within your budget is to create a detailed shopping list. Think about everyone you need to buy for, the groceries required for holiday meals, and how much you can realistically spend on each category. Don’t just assign a flat amount to each person; be specific. For example, you may want to spend more on a close family member and less on a distant relative. Planning this way will help you avoid overspending.

While sticking to your budget may be difficult—especially if you’re shopping at the last minute—having a clear plan will help guide you. By knowing your limits, you can avoid overspending on gifts or holiday-related expenses.

3. Use Gift Cards and Rewards Points to Stretch Your Budget

If your budget feels stretched thin after crunching the numbers, there are ways to get creative and make your funds go further. Dig through your drawers or purse to find unused gift cards or vouchers. These can be a great way to offset some of your holiday expenses. Even credit card reward points or store loyalty points can be used strategically to purchase gifts, food, or holiday treats.

For example, if you have $50 in gift cards, you could use them to buy presents for your family or friends, freeing up some of your cash for other expenses. If you’ve accumulated points throughout the year, you can use them to reduce the cost of shopping or even convert them into gift cards for others.

4. Try a Cash-Only Approach

One of the simplest ways to keep your holiday spending in check is by going on a cash-only diet. When you pay with cash, you limit yourself to spending only what you’ve physically set aside. For instance, if you’ve allocated $300 for Christmas gifts, put that amount in an envelope and break it down per person. Once the money is gone, it’s gone—no more swiping the card.

Although credit cards offer rewards and points, the temptation to overspend can quickly derail your financial goals. A cash-only approach eliminates this risk and helps you stick to your holiday budget.

5. Involve Your Family in Budgeting

Holiday spending doesn’t have to fall entirely on one person. Have an open conversation with your family about budgets and expectations for gift-giving and holiday events. You may find that family members are happy to chip in for meals or contribute to gifts. Hosting a potluck dinner can be a great way to share the costs of a holiday meal.

By collaborating on budgeting with your family, you can create a more affordable and enjoyable holiday season for everyone involved.

6. Avoid Taking on New Debt

With all the tempting “buy now, pay later” offers and store credit card deals during the holiday season, it can be easy to fall into the trap of increasing your debt. However, if you’re already dealing with debt, it’s important to resist the urge to take on more. These promotions might seem appealing, but they often come with high interest rates or payments that will stretch your finances even thinner. If you’re already managing a debt repayment plan, taking on new debt will only slow your progress.

7. Plan Ahead for Next Year’s Holidays

Looking ahead, it’s a good idea to start saving for next year’s holiday expenses now. Set aside a small amount of money each month throughout the year for gifts, meals, and other holiday costs. Saving $20 to $50 per month could leave you with a decent amount by the time the holiday season rolls around, reducing the financial stress when it arrives.

8. Reflect on Last Year’s Experience

Before you start spending, take a moment to reflect on how the previous holiday season impacted your finances. If you found yourself struggling to pay off credit card debt in January, remember that this year’s decisions can set the tone for a better financial start to the new year. Planning and sticking to a budget will prevent you from repeating past mistakes and help you avoid the dreaded financial hangover.

Conclusion

Navigating the holiday season while managing debt repayment requires careful planning and discipline. By sticking to your debt repayment plan, creating a detailed shopping list, using gift cards and rewards points, and keeping your spending within a set budget, you can enjoy the holidays without derailing your financial goals. Involving your family, avoiding new debt, and planning ahead for next year will help you create a more financially secure holiday season—one that won’t leave you with a mountain of debt in the new year.