If the pandemic has shifted the way you spend money, you’re not alone. According to a recent Manulife Bank Debt Survey, which polled 2,001 Canadians from all provinces between the ages of 20 – 69 years of age, three times as many Canadians plan to be cautious and thrifty with their spending this holiday season compared to before the pandemic.
This stat doesn’t come as a surprise with current markets hindered by the spread of Omicron and the current inflation index at 4.7 percent in October, the highest it’s been 18 years. Now is the time to watch your household bottom line and not get further in debt. One positive to come out of the pandemic is that nearly one-third of Canadians are debt-free, and fewer Canadians are in less debt than a year ago.
So, if you are planning to be more mindful of your spending this holiday season, try out these tips to keep you on track.
1. Re-assess your financial plan and goals
Re-assessing your financial plan and goals is a great place to start because it forces you to put spending front of mind. For some Canadians, the circumstances surrounding the pandemic have put them in a better financial position by slashing debt and spending. While you may feel anxious about your financial future, like many of us, knowing exactly where you sit financially can feel empowering and practical. By shining a spotlight on your finances, you can gain a greater top-down perspective of your overall financial picture and a sense of control in times of economic uncertainty.
2. Work with a financial advisor
Fear thrives in uncertainty and can paralyze you from proactive action with your finances. In fact, according to Manulife’s Bank Debt Survey, 71 percent of Canadians admit they don’t even have a financial plan. If you are going through the motions with no financial plan, seeking the help of a professional financial advisor can make all the difference in mapping out a financial plan that will help you meet your goals. Even if your goals seem far off now, having a plan and working with an advisor rather than no plan will ultimately help get you there faster.
3. Focus on value-based spending
Do you spend money on items that give you little return, no lasting satisfaction, joy or value? That is a big waste. So why not gauge your level of purchasing satisfaction before you buy using the Spending Pleasure Meter below.
This is a fun and revealing way to determine whether a purchase will be a real pleasure or just a waste… before you buy. Next time you’re considering a non-essential purchase, ask yourself these five quick questions and let our Spending Pleasure Meter guide you:
1. How long have I wanted this and seriously considered its purchase?
a. Less than two days: 0 points
b. Two days to one week: 1 point
c. One week to one month: 3 points
d. More than one month: 5 points
2. Did I want this before I saw someone else with something similar?
a. Yes: 6 points
b. No: 0 points
3. The last time I purchased a similar item, how long did my enjoyment last?
a. A lot longer than I expected: 3 points
b. About as long as I expected: 1 point
c. Not very long at all, come to think of it: 0 points
4. If I finance or charge this item, will I still be paying for it after the pleasure is gone?
a. Yes: 0 points
b. No: 1 point
5. Can I postpone this purchase for a month, without causing harm, discomfort, or inconvenience to myself or others?
No points either way for this one. But if you can postpone the purchase, why not put it off? And you’ll be surprised how often you’ll realize in a month that you didn’t really need or want that item after all!
Total your points. Here’s what your score means, using our fun and helpful Spending Pleasure Meter:
13-15 points: Go For It! Probably a worthwhile purchase and will give you lasting pleasure.
9-12 points: Wait Awhile. You have mixed feelings. Wait a few days, then revisit the Spending Pleasure Meter and test yourself again.
6-8 points: Probably Not. You know in your heart you could happily get along without this.
0-5 points: Are You Serious?!? This is about as pleasurable as flushing that money down the drain. Something else would give you much more satisfaction!
4. Cap your gift spending
Set a price limit on the amount you want to spend on gifts and stick to it. You can also agree with family members to set up a holiday gift exchange where you draw a name and buy one family member a gift instead of everyone. And remember, gifts are not something you always have to purchase. You can also gift things you make, your skills and expertise and even your time.
5. Support local small businesses
Canadian small business owners have felt the brunt of the pandemic economically while big box and online retailers such as Amazon have profited. Give small business owners a bit of a financial boost this holiday season by shopping locally. Virtual and local Christmas craft fairs are a great way to find unique, quality gift ideas from local entrepreneurs and small business owners you probably didn’t even know existed. Choosing to shop locally in your hometown is also a great way to give back and connect with your community. And if you love the products you find locally, spreading the word by sharing your thoughts and photo gift ideas on your social media network is another great way to support local businesses.
6. Give the gift of an experience
The gift of an experience will trump material gifts every time. There are many reasons for that. One is the principle of what researchers call adaptation; the excitement over a material object is short-lived; the novelty and satisfaction garnered from receiving that gift wanes. On the contrary, experiences are unique and unexpected: they don’t fit our social norms or associations of traditional gift-giving. Having experiences also builds connections, not just with ourselves (we learn and experience something new) but with those, we are sharing the experiences with. According to the Journal of Experimental Psychology, we also develop more happiness from experiences than material goods because experiences create more meaning that turn into lasting memories that stay with us over the value of a material possession that fades with time.
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