Holiday hangover can aptly describe January’s financial woes. First comes the euphoria, then comes the sobering reality that you must pay for your indulgence, and it will hurt.

According to a recent RBC Canadian Consumer Outlook Index survey, Canadians plan to spend an average of $629 on gifts this year. More than half plan to fund their festivities with savings, 24% plan to use credit cards and 23% admit to not having thought about how they’ll pay.

Financial experts warn that emotional spending during the holidays can push you over your financial limits, but a proper plan can prevent the hangover.

“If you’re going to pay by credit card, don’t carry a balance,” advises Perry Quinton, vice-president of the Investor Education Fund. “Just don’t take that hit in the middle of January because RRSP season is coming up and you’re going to need money to put aside into savings.”

Here are some strategies to help you emerge from the holidays financially merrier:

Make a list and check it twice  List everyone you plan to buy for and re-examine the list with the unforgiving eye of a discerning bouncer. See who you can exclude from the lineup. For example, Interac Association commissioned a survey and found that one of four Canadians plan to buy for their pets and more than one-third will buy gifts for themselves. Something to consider: Do you and your cat, Shadow, really need those matching sweaters?

When did gifts mean love?  Love means love. And chances are, your loved one won’t like the gift anyway. (Almost 80% of Canadians surveyed by RBC have gotten gifts they don’t like.) So give something else: Give the gift of time. Instead of buying presents, go for brunch with your gang or go on an excursion with the family. If you want to give the gift of giving, consider charity: The Western Union Holiday Gifting Index says 87% of Canadian consumers would trade one of their holiday gifts to make someone else happy. So send your father a card with this note: “In lieu of your regular gift of socks and ties, I have made a donation to [insert charity of choice].”

Earn more cash and save it  Make some sacrifices: Cut out your salted caramel mocha for the month of December or temporarily cut back on premium cable. You could also pick up some extra work. Retailers are expected to hire thousands of seasonal workers over the holidays. For some extra cash, try selling your husband’s storm trooper costume on Kijiji.

Set a budget and stick to it  Easier said than done, I know. Only 27% of Canadians claim to track holiday spending to keep their budgets under control, according to the Consolidated Credit Counseling Services of Canada and one in three Canadians admit they purchase gifts they cannot afford; on average, those who overspent during the holidays went $467 over budget. So how to stay within budget? Go shopping when you’re well-fed and in a good mood because your willpower will be stronger. Also don’t be fooled by the word “sale.” Do prior research; studies show that items sold on “sale” can be as much as 57% more expensive than normal. Finally, shop early: 70% of Canadian shoppers reported waiting until the last minute to shop, according to the study for Western Union, and desperation does not fuel good choices.

Look for coupons!  No time for scissors and clippings? Jeff Schwartz, executive director of the Consolidated Credit Counseling Services says there are a myriad of websites out there for your financial benefit including: or or

Get creative  If you have a large family, organize a gift exchange to reduce the number of gifts you need to buy. Sites such as help organize and assign names for a round of Secret Santa so there is no gift rigging. Better yet, play the white elephant gift exchange/Yankee Swap and infuriate your in-laws by stealing their Tim Hortons gift card.

Leave the credit card at home  One of the best ways to stick to your budget is use cash. There is a pain associated with forking over your hard-earned money and once it runs out, it should serve as a cue to cease and desist on the shopping. That being said, if you do use your credit card, pay it off on time. Use a credit card debt calculator to determine how long it will take to pay off the holiday balances. (Say you used your credit card to buy your wife hockey skates on sale for $350. With 19% annual interest and $50 monthly installments, you’d pay off the debt in eight months. The skates would then have cost you about $400 or 20% more than the original price.)

Don’t let great distance equal great spending  Fifty-six per cent of Canadian consumers will not be able to see all of their loved ones this holiday season and long-distance gift giving can affect your budget (63% exceeded their holiday budgets last year, according to the Western Union Holiday Gifting Index 2012 Survey). Send your loved ones cash, or shop online and get free shipping directly to their homes.

Enlist a shopping Scrooge, I mean, encouraging helper  Joseph Grenny, co-author of Crucial Conversations, found in his research that 74% of people struggle to discuss holiday spending with their spouse (23% even resort to hiding price tags). Speak to your spouse early about spending limits and hold each other accountable; otherwise, find a friend and make a pact to stick to a budget.

Source: Financial Post