Budgeting is nobody’s favourite chore and it’s definitely not mine. Especially during the holidays, when picking out and wrapping up the perfect gifts is something I genuinely look forward to. But I’ve had to reframe the way I think about holiday budgeting. Instead of viewing my budget as a barrier to spending, I’ve redefined it as my “opportunity fund”. 

With this mindset, I’ve been able to start approaching holiday budgeting as an almost-fun, once-a-year activity to look forward to. But if you’re stressed about upcoming holiday bills, you’re not alone. Consumer debt levels rose to $2.5 trillion in the first half of 2024, according to Equifax Canada, with the average credit card holder carrying over $4,300 on their balance. And there’s nothing joyful about that.
There are already some excellent resources on how to manage holiday spending habits and create a budget. But let’s take a deeper look at why we spend (and give) the way we do during the holidays – and how we can make the reality of holiday budgeting a little more fun.

Gamifying holiday saving – and spending.

The truth is, giving can be addictive – in a good way. The science of kindness helps explain why we feel compelled to give gifts, even when we’re financially stretched. Turns out these acts of generosity light up parts of the brain that make us feel warm and fuzzy. 

Oxytocin (aka the “cuddle hormone”) and dopamine (aka the “happy hormone”) flood our brains when gifts are involved – from the process of researching the perfect item, all the way to wrapping it up and giving it to a friend or loved one. 

I decided to use this brain chemistry to my advantage. Since my holiday budget is separate from my everyday budget, managing it requires a different mindset than saving for an expected (and very unglamorous) bill. In the spirit of keeping it fun and dopamine-inducing, I gamify it. In other words, I make it a personal challenge so that I can turn my efforts to save money for gifting into a game.

Here’s how I do it:

1. Create my game levels:  I start by identifying my short-term budgeting goals, or “levels”. The easiest way to do this is to create a gift list and rank everything based on price. You can use Vancity’s budget spreadsheet as a template to get you started, or create your own. The first few levels are the least expensive gifts, and the easiest to “win”, which feels so much better than facing a total cost for all my gift items.
2. Reward small wins: The way I start funding my budget is by rewarding myself with cash for avoiding buying things I consider splurges. For example, every time I make a coffee at home instead of going out for one, I add $5 to my holiday fund. If I stay in and cook instead of ordering my usual Friday night take-out treat, I’ll add another $15 into the gift budget. This way, I not only get the immediate gratification of money “earned”, but I also have the larger reward later on of a healthy budget to spend on gifts. The more money I save, the more motivation I build to climb the levels on my list.
3. Use a credit card. This might seem counterintuitive, but I also use my credit card for almost all my non-cash purchases. A rewards card like Vancity’s enviro VISA gives you reward points for every purchase. Then you can redeem points for gift cards, travel or even cash right back into your savings account or to pay off a line of credit. I never put anything on my credit card that I don’t already have the funds to pay for, so I pay off the balance every month and the accumulation of points is like getting free money.

Since my holiday budget is separate from my everyday budget, managing it requires a different mindset than saving for an expected (and very unglamorous) bill.

Holiday giving strategies that won’t blow your budget.

Just as the best memories often come from the journey and not the destination, I’ve also redefined the experience of giving by focusing on the process – not just the gift itself. I still get a good dose of happy hormones and I can make them last longer by getting creative with gifting strategies that won’t blow my budget. 

Here are some of my favourite holiday gifting strategies:

• Splitting up value packages: A lot of people on my list love skincare, makeup and perfume, so I often purchase a value-priced holiday set and break it up to create smaller gifts for multiple recipients.

• Giving homemade holiday treats a glow up: Holiday baking is a classic (and budget-friendly) option, but it can feel a little less-than-exciting. To boost the appeal, and make it more personal, I love giving pretty bags filled with pre-measured dry ingredients so that the recipient only has to add liquids and bake at their convenience. This can be tailored for each person and works for hot cocoa, pancakes and more.

• Taking pleasure in the hunt: When people say, “it’s all about the hunt,” they’re talking about that dopamine hit that comes from finding the perfect vintage gem, nestled among hundreds of other items and priced at a discount. Those finds do exist, and they’re often worth the extra time and effort it takes to find them – if only for the dopamine boost!

Take control of unexpected holiday debt.

Even with the best budgeting strategy, when the holidays wrap up for another year, you may still be faced with some debt. Almost one-third of Canadians who holiday shopped using a credit card last year are still carrying a balance, according to NerdWallet’s annual survey. So don’t be too hard on yourself about it – but also, don’t let it carry over for too long. 

If I misjudge my holiday budget and find myself looking at unexpected bills in January, there are a few additional strategies I use to clear off that debt as quickly as possible:

1. I use my credit card rewards points to pay down the balance.
2. I continue the gamification method of building some extra cash without dipping into my everyday budget.
3. And for next year, I try to buy holiday supplies when they’re on sale in January. The savings really do add up!

Building on these holiday budgeting habits year after year can eventually lead to a situation where your budget will be large enough and your debt will be small enough so that you come out ahead. 

And, guaranteed, that will give you the biggest dose of happy hormones ever.
Learn more about putting your credit card for holiday budgeting at https://www.vancity.com/bank/credit-cards.