Four steps to avoid a financial hangover in January

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Holiday spending can catch us parents off-guard. All year, we’ve managed the credit card bill pretty well, but in January, the balance is frighteningly high. It’s the classic holiday financial hangover. While we want to create a magical experience for our kids, the memories of a wonderful Christmas season can be sullied by some combination of regret and anxiety in January.

I have experienced this many times over the years. With two children, three siblings, and nine nieces and nephews, holiday spending had a tendency to get a little out of hand. Between the big turkey dinner, decorations, and of course, gift-buying, my credit card bill could easily double.

My kids are now 18 and 16, and the holiday season looks a lot different than it did 10 years ago. Here are a few of the lessons I’ve learned about making the holiday season feel good - not just in December, but in January, too.

Mindful spending

Keeping spending in check is key, and while some situations call for a budget, for most people, budgets don’t work. Good intentions of staying within a set spending limit quickly fall by the wayside when the burden of tracking purchases becomes too much. Instead, taking a mindful approach to spending is much more practical and effective.

Mindful spending is empowering. By making conscious choices about what you buy, you feel in control of where your money goes. Mindful spending means asking yourself “Do I actually want to buy this?” every time you approach a virtual or physical checkout.

Mindful spending at Christmas is much easier when you have a gift list. I keep a list of gift ideas on the Notes function on my phone, so when it comes time to shop, I know what I’m looking for. Having a list will prevent the dreaded mall wandering and online scrolling that is the grease of the overspending hamster wheel.

This also applies to home décor. It’s easy to pick up extra Christmas decorations, like holiday planters, wreathes and lights. It’s so joyful! But do you need them? Will they actually make things better? If so, great. If not, take a pass. It really doesn’t take much to make a house look merry and bright.

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Smart gift-buying

The holiday hangover isn’t just about money – it’s also a “stuff” hangover. If you feel burdened by the clutter on Boxing Day, that’s probably a sign that you bought too many gifts for your kids, and possibly the wrong ones.

Smart gift-buying means getting things for your kids that they will use. My favourite kinds of gifts are things that they need, but that I wouldn’t normally pay up for. Take the winter coat: you can buy a pretty standard puffer jacket for about $120, and it would do just fine for your teenager. But that’s probably not the coat they want. Their preferred item is more like $400. This is the perfect gift: they will actually want to wear it (and teenagers are pretty good at not wearing a winter coat if they hate the one they have), and they will probably take good care of it. Running shoes, jeans, headphones, backpacks, winter boots, and computer devices all fall into this category.

Setting money aside all year

Paying $1,500 in January for your holiday spending can feel painful, but setting aside $125 a month year-round is much easier. Set up automated transfers from your chequing account to your savings account. This could be weekly, or on the day you get paid. You probably won’t even notice it’s gone. When December comes, you can dip into this account when you’re out shopping, or use it to pay off the credit card in January. (This works great for other things too, like vacation money.)

Set the example

When you take a mindful approach to spending and gift-buying at Christmas, not only are you doing something good for yourself, but you’re also sending a message to your kids that you don’t have to go to excess to enjoy the season. By taking a more modest approach to the holidays, your kids will bring this habit into their adult lives, and this might be the best gift you’ll give them this year.

Anita Bruinsma is a Toronto-based financial coach and a parent of two teenage boys. You can find her at Clarity Personal Finance.