(Ottawa) A holiday spending plan is always a good idea, but as inflation drives up prices and higher interest rates weigh on households, it’s more important than ever to establish a budget.

In a perfect world, you would have started planning your holiday budget several months ago, says Anne Arbor of the Credit Counseling Society. But it is never too late.

Arbor says to start by asking yourself how you want to feel in January and February, when the bills arrive.

“Do you want to have wonderful memories of time spent with family and friends, joy and laughter, and good meals? Or do you want to feel stressed, exhausted and, frankly, financially anxious? », underlines Ms. Arbor, director of strategic partnerships and education for the association.

According to Arbor, it’s important to be very specific when making a list of people you want to give a gift to and determining how much you want to spend.

But a holiday budget should include more than just the cost of the gifts you hope to give, and Arbor says it’s important to factor in all the extras of the season.

Cards, ribbons, gift wrapping and shipping costs all add up.

The Christmas budget should also include the cost of any parties you plan to host, as well as additional restaurant meals and expenses associated with the holiday season, such as special clothing and gifts for hosts.

Travel costs can be significant during this time, even if you don’t fly across the country.

Money worries can make an already stressful time of year worse for many people.

According to a BMO report, 78% of Canadians plan to buy fewer gifts this Christmas, while 51% say thinking about holiday spending causes them financial anxiety.

For example, 37% said they weren’t sure they could afford all the items on their holiday shopping list.

Gayle Ramsay, head of everyday banking, segments and customer growth at BMO, says understanding how you spend your money today is key when setting a budget.

But making a budget is only the first step; you must also respect it.

Ramsay says people often prepare budgets without taking the time to examine how they are currently spending their money.

“And that’s usually where they fall into traps,” she says.

To do this, Ramsay says there are digital tools built into many bank mobile apps that allow you to monitor your spending and budget to help you stay on track.

Interest rates on loans, such as lines of credit that borrowers can use to pay unexpected bills, have increased as the Bank of Canada raised its benchmark interest rate in its fight against inflation. Although not as high as credit card rates, lines of credit rates are now much higher than they were two years ago.

Although the urge to be generous is strong during the holidays, Arbor says no one wants a gift that will put the giver in debt.

“There are things to do that don’t involve spending money. There are many ways to spend time with family and friends,” she concludes.