Programs that encourage monthly payments to pay off an item are popular for a reason – and not because consumers diligently make each payment without issue.Zivica Kerkez/iStockPhoto / Getty Images
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Now that the holiday shopping season is upon us, some clients may be turning to their advisors to ask for tips on how best to stay in the black.
Ideally, clients already have a spending plan geared toward the holidays set up in advance using their automated monthly contributions to a savings account. But many people are likely experiencing financial difficulties this year due to rising household expenses, says David Martin, founder of Eltero Financial Partners Inc. in Halifax.
He suggests being upfront with family members about their situation.
“It is nothing to be embarrassed about,” Mr. Martin says. “If the people you tell really care about you, they would rather you spend your time with them anyway, rather than your money.”
Nonetheless, here are seven tips advisors have for money-strapped clients during the holidays.
1. Track your spending
Mr. Martin likes to research gift ideas to know the approximate cost and what he can afford to spend. Clients accustomed to buying for many family and friends may need to reduce their list to stay on budget.
Yet, tracking purchases isn’t just about the gifts; clients need to keep abreast of all their spending in November and December.
Alyx Valdal, certified financial planner (CFP) at Iron and Pearl Financial in Victoria, says many clients’ budgets veer off track with holiday-related purchases such as wrapping paper, postage, Santa photos and decorations.
“There’s also an increased cost for food and drinks for the holidays,” she adds.
For parents buying gifts for kids, Gabriel Lalonde, CFP at MDL Financial Group in Ottawa, recommends following a specific bucket, for example, of one thing they desire, something they need, something to read and something to wear.
“Otherwise, all the gifts become ‘gifts to play with’ and those gifts are all done after a month,” he says.
2. Emphasize experiences over material gifts
When Mr. Martin started a new business, he had to have a conversation with his own family about limited finances. In lieu of gifts, they decided to organize a Christmas day hike at a much-desired provincial park with a few other families.
When he thinks back to his most memorable occasions, he always recalls the experiences more than the actual gifts received – something that became paramount during the pandemic years with lockdowns and more families spending time together outside.
Mr. Martin adds that gifts of experiences could mean a donation of your time, such as coupons for babysitting, running errands or spring cleaning.
3. Suggest ‘Secret Santa’ giving
If a client has a large family or workplace, rather than buy a gift for everyone, they could suggest everyone draw a name, then one person just buys for that one individual who is picked, Mr. Martin says.
“Set a limit of, say, $20; doing so encourages creativity,” he says. “It’s more of a fun gift to enhance the experience of getting together with people.”
Buying just a few gifts also decreases the stress for everyone, he adds.
4. Avoid store promotions
Those glossy flyers promoting the biggest sale of the season? Get rid of them quickly, Mr. Lalonde says.
He notes that while a coveted gift possibility for a loved one may be on sale, the temptation to buy even more items is high for many people. For that reason, he suggests online shopping and not browsing. Order only the item that you’re looking for and add that to the cart.
5. Don’t buy now, pay later
Programs that encourage monthly payments to pay off an item are popular for a reason – and not because consumers make each payment without issue diligently, Mr. Lalonde says. They make money due to consumers not reading the fine print on penalties if they miss a payment.
“They need to pay now and not later. Can’t afford it? That’s where your budget comes into play,” Mr. Lalonde says.
6. Shop early
The earlier you buy, the less tempted you will be into making bad decisions.
“You don’t want to feel pressured to buy anything that isn’t worth the purchase in the first place,” Mr. Lalonde says.
Shopping during the week at an earlier time of day when stores aren’t as packed also helps clients avoid crowds and stressful situations, Mr. Martin says. As a bonus, stores will be more stocked with merchandise earlier than toward mid-December.
7. Think outside the box
Ms. Vadal likes to give edible gifts such as jam and preserves. Other ideas include coffee, pastries and handmade spa products. She supports local businesses when giving these small gifts, a gesture she says is appreciated by many in her circle.
Regifting items such as unused gift cards isn’t as gauche as it used to be, but clients should really know where their gift receivers stand on that point.
“There are definitely people I could give a gift I found at a thrift store and it would be appreciated and with others, it would not,” Ms. Vadal says.
In the case of regifting unused gift cards, she notes it’s important to check that the card is still valid and activated properly.
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