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Financial Literacy

How to Avoid Debt During the Holidays

December 8, 2023Back to Learning Centre

With the holiday season in full swing, almost everywhere you turn will have some sort of reminder that Christmas, and the broader holiday season, is almost here.

Window displays are sparkling with festive décor, restaurants are offering holiday themed food and beverages, and the cleverest marketing schemes are drawing your eye to a new pair of shoes. The celebratory energy paired with various societal pressures can make it seem impossible to avoid spending more than you’d like over the holidays. The unwanted result of overspending: A financial hangover that will remain long after the merry moments of Christmas have come and gone.

Although it may be challenging thoughtful planning, mindful spending and setting realistic boundaries, are key to avoiding holiday debt. Here are 5 simple and doable ways to steer clear of a financial holiday hangover:

Create a list with a budget

A shopping list with a budget breakdown will make you less susceptible to impulse buying. After taking an honest look at your finances, allot a comfortable amount of money to holiday must-haves. Then disperse that amount between the holiday expenses you have, including gifts, décor, food, entertainment and travel.

Take note of where you might be able to cut back; a thoughtful gift comes from the heart! There are many sentimental DIY gift options that don’t involve spending money.

And be sure to put aside a variable fund for when something sparkly catches your eye that you just can’t do without. Setting aside money for an impulse buy is a great way to keep unexpected purchases within the budget.

Set boundaries

Seeing others indulging in glamorous soirees, shopping, or sharing extravagant gifts on social media is a temptation that’s very hard to resist.

Combat unwanted feelings of competition and cringe-worthy “Come Shopping with Me,” social posts by setting boundaries as you plan your time and spending. It’s helpful to figure out ahead of time who will receive a store-bought gift and what kind of parties (if any) you want to make an appearance at, and act accordingly.

Last-minute invites and expenses are bound to pop up. Manage them by reviewing your boundaries and budget and considering if they align with your longer-term goals and needs. Your peace of mind is not worth it.

Take advantage of free events and holiday sales

After preparing your shopping list, subscribe to newsletters from the retailers you’d like to buy gifts from and keep-in touch with your favourite local shops. This way you’ll be the first to know about sales and promotions.

When organizing events, planning a potluck or offering simple snacks instead of a whole meal can save on catering costs. Local tourism websites or social accounts typically have holiday-themed leisure activities, check yours to see what’s being offered for free in your community. It’s a great way to take part in festive fun without adding any financial stress.

Avoid excessive impulse buying

As mentioned, putting aside a small amount of money to indulge in unplanned expenses will increase the likelihood of sticking to your holiday budget. However, when shopping for others or simply browsing around to kill time, be cautious of excessive impulse buying. It can be one of the leading culprits of debt creation. The festive atmosphere, combined with FOMO marketing tactics such as “limited time offers” and “flash sales” can incite a shopping frenzy. Take a moment to think about the necessity of the item and whether it’s worth spending your variable purchase money.

Spotting “wants” while you shop around is also the perfect opportunity to create a wish that you can refer others to or plan to come back for later.

Give gifts from the heart

Personalized handmade gifts, acts of service or meaningful experiences can often be more heartfelt and memorable than store-bought items. Embrace the spirit of the season by giving the gift of time, creativity or shared experiences. Extend this option to friends and family for a money-free heart-warming gift exchange that could become tradition for years to come!

Skipping the haunting financial strain of debt does not have to come at the expense a joyous holiday season. Apply these tips to dodge those persuasive marketing techniques, peer pressure and FOMO and you protect your finances! Just think, every dollar saved is a dollar you’ll have to start the new year on the right foot!


Written by Embark

Embark is Canada’s education savings and planning company. The organization aims to help families and students along their post-secondary journeys, giving them innovative tools and advice to take hold of their bright futures and succeed.