How to Stick to a Holiday Budget

The holidays always bring sales and fancy parties that entice us to drop lots of money. Know how much you want to spend so the new year is just as enjoyable.

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A few years ago, Rebecca Rosenblum, a well-known Canadian author, and her husband, Mark, were heading to the East Coast to visit his family for the holidays.

Look at what you spent last year around this time. If you regretted the indulgence later set a new limit this year.

The couple had created a budget for the holidays, as they often do. Then, a blizzard led to an unanticipated stopover. “We got stuck in Montreal for a couple days. So that was an unexpected vacation,” she says. The airline covered their hotel and some of their food costs, and while the city was full of tempting and pricey restaurants and outings, they managed to stay on budget. “Whatever they didn’t cover, we didn't buy," says Rosenblum.

Not every family is so disciplined during the holiday season. An Ipsos poll found that 40 percent of Canadians spent more than they intended to on holiday shopping in 2017. Even higher net-worth individuals are prone to overspending, says Kerry Taylor, a financial expert and the creator of, a site devoted to helping people save money. “People with a lot of money can also overspend on the holidays,” she says. “Whether you have millions or hundreds saved, we all have the ability to outspend what we earn.”

It’s a good idea, even for those who make a good living, to create a holiday budget and stick to it. Here’s how.

Be realistic

Look at what you spent last year around this time, says Taylor. If you regretted the indulgence later “set a new limit this year,” she says.

The holidays are meant to be cheery, but resist being too positive about your seasonal finances. “We humans have something called an optimistic bias,” explains Taylor. “We tell ourselves when we go into stores that we’ll be fine, we won’t overspend this year.”

Since gifts are a major expense, make a list of all the people that need a present – that can help you stay focused. If your family or friends tend to overbuy, talk to them in advance about limiting gift giving. Consider planning a group outing for the new year instead, when everyone has more time – and money.

When you budget, account for everything. “Be aware that food, decorations – all those lights that burnt out that you need to replace – those have a cost as well,” says Taylor.

Stay on target

Once you’ve made your budget you need to take it seriously. Again, behavioural science can work against us. “We also have something called a present bias, so spending on gifts today feels awesome,” explains Taylor. “We don’t grasp how our future is going to look when we get the high credit card bill next month.”

To fight this bias, Taylor suggests pausing when you’re in the high of shopping, and visualize how you’ll feel when the bills arrive.

Use your itemized budget to help you save further: you know who you’re buying for, so plan in advance for those gifts. (In fact, Taylor has a gift-giving worksheet.) If you buy at the last minute, you’re more likely to pay top dollar.

Listen to your advisors

While everyone can blow a budget, one difference that wealthier individuals have over others is teams of people who can help keep spending under control. “High net-worth people often have access to personal money managers and accountants who can often help rein in overspending,” says Taylor.

Use those professionals to help you budget, and don’t be afraid to check in with them during holiday season to help you stay on track.

With the holiday season approaching, Rosenblum is once again setting a budget. While it’s hard to predict exactly what will come up during this busy time, if she does need to buy an extra gift, or if she once again has to spend a night somewhere unexpected, she’ll be ready. “The advantage of planning is when something cool does come up, I’m not at my breaking point,” she says. “I want to have flexibility.”

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