As the holiday season begins, a local debt help expert is warning Canadians against getting caught up in the consumerism of the time of year.
A recent survey conducted by BDO Canada Limited found that 52 per cent of Canadians are living paycheque to paycheque. A Canadian Payroll Association survey found that 46 per cent of Ontarians would have difficulty meeting their financial obligations if their paycheque was late.
Those facing such pressures might be struggling with whether they can afford a special gift for a loved one or to travel during the holidays, but what they should keep in mind is their budget, said Andre Bolduc, a senior vice president with BDO Canada Limited.
"Christmas shouldn't be about what is under the tree, but who is around the tree," he said.
Bolduc said three in four Canadians are carrying debt and a quarter of those people are overwhelmed by their debt. He said debt is especially concerning during the holidays because many people plan to spending more on gifts, traveling and entertainment.
If you live paycheque to paycheque, Bolduc said it is particularly important to create a budget for the holidays and to stick to it. When creating a budget, people should plan to spend 1 per cent to 1.5 per cent of their gross income as a good rule of thumb, he said.
The holiday season can often present a lot of anxiety for people who encounter what Bolduc calls "festive FOMO" or Fear of Missing Out. He said parents often want their child to get the newest toy or electronics because they do not want them to miss out on something their friends might have.
As advertisements bombard people and social media shows what neighbours and family members may be giving each other, it creates a lot of anxiety, Bolduc said.
"You have to resist those temptations," he said.
Bolduc said people should avoid going into debt for the holidays. One of of top resolutions people typically have in the new year is to pay down their debt and a lot of people are not able to follow through on that, he said. Budgeting and starting to pay down debt as early as possible can be crucial.
Other tips Bolduc recommended were to use cash as often as possible and to avoid using credit. He said planning is key and also suggested speaking with your loved ones early to agree you might not get presents for each other this year. Early shopping and comparison shopping can also prevent impulse buys or overspending, he said.
It might be a good time to teach kids that they will not always get everything on their wish lists, he added.
"With proper preparation and planning, you can avoid falling into these pit falls," he said.