Anxious About Holiday Expenses? Tips for Discussing Budget Cuts with Family and Friends

When Deidre Cross found herself in tens of thousands of dollars of debt, the holiday season became the turning point that inspired her to work her way out of financial trouble.

“I used to be the person who would still buy gifts and things, spending money that I didn’t have,” said Cross, the founder of Ohh You Budget.

“I would go into overdraft because my credit cards were maxed out.”

Eventually, Cross realized that a change was necessary. She began discussing financial expectations around the holidays with her friends and family, being honest about her inability to continue pretending.

“I couldn’t afford it, to the extent that we needed to have this conversation,” she said.

Experts suggest that it’s normal to feel stressed about money during the holiday season, but talking to loved ones about your budget and possibly setting financial limits on gift-giving can alleviate a lot of the anxiety associated with the holidays.

“We all know that money is a taboo subject, so it’s very hard to address that,” said Angela Iermieri, a financial planner at Desjardins.

There’s a lot of social pressure to keep up with everyone else, she added, particularly during the holidays when there are numerous event invitations and gift exchanges.

A recent survey by Coast Capital revealed that 72 percent of respondents are experiencing increased financial strain due to the holidays. Despite this, many still intend to spend as usual on gifts, decorations, and parties.

According to Yasamin Alami, a chartered professional accountant and assistant professor at University Canada West, people often spend a great deal of time worrying about money during the holidays: who to buy gifts for and how much to spend.

Discussing this stress can help alleviate the pressure, Alami suggested.

“I think it’s a very brief discussion, and it may seem awkward, but having that quick conversation can free up a lot of mental space and prevent excessive rumination on gift-giving and appropriate values,” she said.

It often feels like you need to match the value of someone’s gift, creating a moving target each year, she noted.

While it may initially feel uncomfortable, you might be surprised at how others respond when you broach the subject, Iermieri said.

“Maybe everyone feels the same way but is hesitant to express it,” she suggested.

“The key here is to be honest with ourselves if we want to be honest with others.”

Another survey, conducted by Ipsos on behalf of Simplii Financial, found that financial constraints are causing many Canadians to stay home for the holidays rather than travel. More than half of the respondents who do plan to travel intend to stay within their home province, while others are seeking savings on flights and accommodations.

Cross concurred that it’s always best to be truthful with people if you can’t afford to travel during the holidays, purchase expensive gifts, or attend every event.

“If you can’t afford something, don’t go into debt or try to do something that’s beyond your means,” she advised.

You don’t have to provide too many details, Iermieri added, depending on your relationship with the person. But if you’re comfortable, you could inform them that you’re working towards specific financial goals or adhering to a budget.

“I think it’s crucial, particularly with those close to you, to not be afraid to do so,” she remarked.

You can propose setting a limit on gift prices for the season or suggest a Secret Santa exchange, or even a holiday activity in lieu of gifts.

It’s all about establishing boundaries and sticking to them, she stated. This might involve reviewing your schedule and declining some event invites, but that’s preferable to overspending and dealing with a hefty credit card bill later on.

“It’s simple to get carried away and say yes to everything,” Alami pointed out.

“So I believe being proactive and setting a budget for yourself is the initial step.”

If you’re informing someone that you can’t attend a holiday gathering, you could propose a more budget-friendly alternative, or express a desire to spend time together in the new year, she suggested.

“During the holidays, we typically fall back on traditions, so there’s this idea that we always do this, or our family has this tradition every year, or my friends expect me to host this party,” Alami observed.

“It’s acceptable to have these conversations and say, ‘How about we start some new traditions?’”