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Published November 1, 2021

7 Money Strategies for Savvy Holiday Shopping

When shopping for holiday gifts, using sales, credit cards and alternative payment options to your advantage for less financial stress in the new year.

The holidays are a magical time of year, but making merry can take its toll on your wallet. Canadians plan to increase their holiday spending in 2021, to an average of $1,420, according to a survey conducted by PwC Canada. That’s a 29% jump from 2020, when individual Canadians planned to spend an average of $1,104, according to the survey.

As much fun as it is to splurge during the holiday season, reckless spending can create financial headaches in the new year. So how do you score gifts for everyone on your list without breaking the bank? Here are seven savvy money strategies that will help.

1. Create a holiday budget

Budgets come in handy for all money matters and holiday shopping is no different. The goal of creating a budget isn’t to be cheap, but rather to be mindful of your spending and use your money wisely.

Things to think about when creating your holiday budget include:

  • How many people you need to purchase gifts for.
  • What price point you’ll stick to for each gift.
  • How much you’ll spend on food and drink for events, family dinners or parties with friends.
  • Travel expenses if you are going out of town.
  • Clothing and accessories (e.g.: a new outfit for a party).

Although it’s ideal to create a budget well in advance of the holiday shopping season, it’s never too late to make a plan for how much you’ll spend, and on what.

2. Start saving (and shopping) early

The holiday shopping season isn’t that long and it can feel like there’s pressure to spend a lot of money all at once. But, here’s the thing; holidays arrive at the same time every single year. You can take advantage of that knowledge by starting to save money early and shopping throughout the year.

Save for holiday gifts the same way that you save for your other goals.

  • Create a holiday shopping fund. Use your regular savings account or open a separate one just for holiday gifts.
  • Decide how much you’ll save, and how often. It doesn’t have to be much if you get started early. For example, if you get paid every two weeks and save $50 per paycheque, it will take just 10 paycheques (or five months) to save $500 for your holiday shopping. You can even automate deposits to make saving easier.
  • Maximize savings with a high-interest savings account. Stashing your holiday shopping fund in a high-interest savings account is a good way to earn a few extra dollars in interest while reducing the urge to spend your savings prematurely.
  • Shop in the off-season. You don’t have to wait for decorations to go up in order to shop for holiday gifts. Starting your shopping earlier could mean less competition for popular items, better prices, and less spending all at once.

3. Keep your eye out for sales

Keep up with Black Friday sales and other holiday promotions by signing up for email alerts from your favourite companies, or following them on social media channels where sales are frequently advertised.

Because many stores carry the same or very similar products, it’s also worth your while to compare advertised prices before making a purchase. And keep in mind that some stores might price match — if a competitor offers a better price, the store you’re shopping at will lower theirs to match.

4. Maximize credit card rewards

Even if you have money saved for holiday shopping, it may be in your best interest to use a credit card to buy gifts, and then use your savings to pay the bill. Why? Because if you use the right card, your holiday purchases will earn you extra perks, discounts or even cash.

A cash-back credit card allows you to earn back a small percentage of what you spend, while a travel rewards card earns miles that you can use to reduce the costs of a future trip or snag luxury perks, like airport lounge access.

A general rewards credit card lets you earn points that can be redeemed for entertainment, merchandise and gift cards (all of which can be given as holiday gifts themselves, if you already have some points gathered up).

And check to see if your credit card offers price protection. With this feature, you can request an adjustment on purchases charged to your card if the item goes on sale at a lower price, within a specified time frame.

Pro-tip: If you don’t yet have a cash-back, travel or general rewards credit card, the holiday season might be a good time to apply for one, especially if it means getting a generous sign-up offer, such as extra cash back, thousands of bonus reward points, or skipping the annual fee. Your extra holiday spending may make it easier to meet the minimum requirements to earn the bonus.

» SEE OUR PICKS: Canada’s best credit cards

5. Support small and local businesses

Shopping at local merchants is often beneficial to the community, but it can also be beneficial to the buyer. That’s because some Canadian credit card issuers provide perks to cardholders who patronize small businesses.

One example is Neo Financial, a tech company that offers a Mastercard. Neo cardholders can earn extra cash back when shopping at partner businesses across Canada. Because Neo partners with both big and small businesses across the country, the card might allow you to earn cash back and support local businesses at the same time.

Some credit cards have limited-time incentives to help support small, local businesses. For example, during the summers of 2020 and 2021, American Express’ Shop Small campaign allowed cardholders to earn $5 statement credits when they spent $10 or more at a qualifying small, local business.

» MORE: How to choose the best credit card

6. Take advantage of payment options

A growing number of businesses and credit card issuers now offer installment plans or ‘buy now, pay later’ options, both of which let you pay for a large purchase over time rather than as a lump sum.

Credit card installment plans can come in handy, however, keep in mind that they may also mean paying additional fees that will vary depending on the provider.

Many Canadian businesses also now offer ‘buy now, pay later‘ financing through third-party services like PayBright, AfterPay, Affirm and Sezzle. Oftentimes, there is no minimum spend requirement, so you can get a payment plan for any amount of holiday shopping. However, it’s important to be aware that buy now, pay later plans may incur additional fees, so be sure that you can afford the total cost of the purchase.

7. After the holidays, consider a balance transfer card

The above strategies can help you prepare for and carry out your holiday shopping. But if you find yourself struggling to pay off high-interest credit card debt come January, a balance transfer credit card could help.

These credit cards have promotional periods with low interest rates for a designated period of time. Transferring your debt to one of these cards provides a chance to pay down your debt without incurring a lot of interest. But be aware that once the promotional period is over, the interest rate will increase to the card’s regular rate.

About the Author

Hannah Logan
Hannah Logan

Hannah Logan is a writer and blogger who specializes in personal finance and travel. You can follow her personal travel blog or find her on Instagram @hannahlogan21.


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