More holiday, less debt, less stress

Many consumers enjoy loosening the purse strings when the holiday season rolls around. But for some, year-end spending, (or overspending) can have serious consequences … all year long.

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Chartered Accountant Sanjay Thakur is an investment advisor with Queensbury Securities Inc. in Toronto, who also assists clients with financial planning. He shares seven budget-smart tips to help you start the New Year in the right financial position. 1. Have a spending plan – Shop with intention, at times when the stores aren’t so busy that you won’t grab the first (and most expensive!) thing you see just to get out of there. Work from a list, have a spending limit for each gift and an overall budget for the season. 2. Take advantage of today’s tools – Personal money-management software like Quicken or Microsoft Money can be invaluable when it comes to tracking spending and paying bills. Your transactions can be downloaded directly from your bank and credit card accounts, and at the press of a button, you know exactly where you’re spending. It’s important to track where your money goes before it’s all gone! 3. Keep it simple – Having too many cards and accounts can be a recipe for confusion. Try to use one major bank account from which you manage your income, bills and expenses, and one major credit card for all your non-cash purchases. It’ll be easier to track activities and download information, and may even earn you an extra bonus by consolidating and increasing your loyalty-plan points. Use those simple assets to assist you in your holiday shopping but make sure that you are shopping from a list and within your budget. 4. Know the cost of money – Most credit cards charge about 20 per cent annually on unpaid balances, compounded monthly. Thakur says that many people don’t realize that if they don’t pay off the balance on time and completely, interest will be charged – and not just on the balance that’s left unpaid, but on the entire amount charged. 5. Gift cards often remain unused – It’s estimated that about 25 per cent of all gift cards remain unredeemed a year later. While some number of cards may, of course, be lost or misplaced, many simply aren’t used. Put some thought into meaningful gifts that will benefit someone other than the vendor. 6. Have a savings plan – Department stores used to let customers open “Christmas Club” accounts where they could make deposits during the year for spending during the holiday season. Now, you can do it easily through online banking. Set up a specific account for holiday shopping and add a little each payday during the year. It may be too late for this holiday season but just think what next year could bring! 7. Pay cash – If you don’t trust yourself to pay off your credit card balances when they’re due, carry cash or pay with your debit card. When the money’s gone, the shopping will stop. At this time of year especially, Thakur says, it bears remembering that the best gifts of all usually don’t cost much money. Volunteer, donate to charity, or help out a neighbour. Spend time with friends and family, and make the holidays about spending time together, and not spending yourself into debt. Brought to you by the Institute of Chartered Accountants of Ontario