Laura McKay is the co-founder and COO of PolicyMe, Canada's fastest-growing digital life insurance company. In 2021, she was named one of the Women of the Year by Bay Street Bull. Laura has a Bachelor of Mathematics from the University of Waterloo. Her degree focused on Actuarial Science, which included learning about mortality risk, the basis of life insurance pricing and valuation. After her degree, she was employed by Manulife and Munich Re in Actuarial Science. Laura then worked at famed management consulting company Oliver Wyman in New York from 2013-2018. In this position, she worked with many Fortune 500 life insurance companies and helped them develop growth strategies and solve operational problems and regulatory issues.
October 6, 2020
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6 minutes
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It’s no secret that the COVID-19 pandemic has been hard on Canadian wallets. But how does that impact your holiday budget?
According to Statistics Canada, the country had 1.1 million fewer paid workers in August than it did in February, before the pandemic hit. Not only that, but roughly 713,000 Canadians who still had a job were working fewer hours due to “COVID-related absences.”
Even if you’ve been able to stay afloat financially with government benefits, experts worry about what will happen when programs like CERB come to an end. For many Canadians, the end of this government relief is happening now.
A recent survey commissioned by insolvency firm MNP Ltd. found that among Canadians currently receiving COVID-19 benefits, roughly 45% will take on debt when that financial support ends. Here's a breakdown of some of the ways Canadians are planning to make up for that lost income:
45% of Canadians plan to reduce expenses to account for decreased income
21% of Canadians will lean on credit cards
9% of Canadians are considering selling their current homes
8% will seek support from payday lenders
With numbers like this, there's no doubt Canadians are more concerned about the high price of the upcoming holiday season than they normally would be.
It’s more important than ever to prepare a healthy budget to avoid creating even more debt. We chatted with Alyssa Davies and Barry Choi, two personal finance experts, for their tips on creating a holiday budget.
Let's dive into their top tips!
Be Honest with Your Loved Ones
It's easy to get caught up in it, but the holidays really aren't about who can spend the most on gifts. It's about spending time with the people who love you most – and these people will understand if budgets are tighter this year.
Start by having a frank discussion with your close friends and family about what gift-giving and other holiday celebrations will entail this year.
“All Canadians are feeling the financial pinch, and it's okay to find creative ways to reduce the typical spending on gifts,” said personal finance expert Alyssa Davies. “The most important thing to remind yourself is that you are not obligated to buy everyone in your life a Christmas gift.”
You'll be having these conversations naturally with restrictions on small gatherings, so it's easy to transition the topic to budgets for any get-togethers that you are attending!
Davies also encourages setting up gift exchanges with a predetermined budget so no one feels left out.
“It's good to remember that — as corny as it sounds — it truly is the thought that counts,” she said. “I could buy my toddler hundreds of gifts, and her favourite choice would always be the $2 race car I picked up from the dollar store.”
Personal finance expert Barry Choi says it’s also important to be discerning about what you actually need to buy and what is ultimately unnecessary.
“The key thing is to try to keep things accurate and to think about the things that are important to you. Is it really necessary to get your hairstylist or boss a Christmas gift?” Choi said. “Saying no to certain events (or gifts) for budget reasons may make it seem like you're missing out, but your wallet will thank you. The last thing you want is your bills to arrive in January with no plan on how to pay them.”
Take Advantage of Black Friday and Cyber Monday
For Choi, the key is to start shopping sooner rather than later – even for things like decorations. He starts shopping on Black Friday, which he calls the “unofficial start to the holiday shopping season.”
“There are tons of deals at this time of the year, so you can take advantage of them if you're prepared,” Choi said.
He also recommends looking at travel deals, even if travel isn’t a possibility for awhile.
“If you can get a healthy discount on gift cards, (travel) is definitely worth considering,” Choi said. “Overall, do your holiday shopping as soon as you can. The closer you get, the harder it'll be to find the perfect gifts.”
Davis recommends watching the deals in the days and weeks leading up to Black Friday, too.
“Although most of these sales are advertised as one-day events, they tend to expand over the week leading up to and after the official day,” she said.
Taking advantage of these online sales is a win on more than one front! Not only do you get the great prices available for promotion, but you also avoid the crowds. This is key to shopping safely, given the current pandemic.
Track Your Spending
Creating a physical holiday budget to track your spending is key to saving money, said both experts.
“One of my favourite ways to control my holiday gift-buying is by setting up an Excel spreadsheet that tracks every potential gift, its cost and where I can buy said gift,” Davies said.
“This way, I can keep track of potential sales in the months leading up to Christmas. I'm also aware of my bottom line so that I don't overspend.”
Don’t feel embarrassed if you have to limit your spending to end the year on a high note, Choi said.
“The reality is that many people were hit financially due to COVID. If you have to reduce your budget this year, you should feel no shame,” Choi said. “Estimate how much you'll need to spend on gifts, seeing friends and entertaining, then save accordingly.”
Don't Let a Bad Holiday Budget Ruin Your 2021
There's no denying that 2020 has been rough, but hey, we've made it this far! And you don't want to set yourself up for a rough financial start in 2021.
With these tips, you can spread some cheer while staying safely within your holiday budget. And – cliché alert! – you'll be giving yourself the greatest gift you can by avoiding mountains of holiday debt.
The holidays may look different, but you can still make them special.
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