People over presents this holiday season

This year’s season spending forecast for the holiday season: Cautious, with periods of restraint and frugality.

A weird holiday season awaits, and not just because a lot of us will be socializing less than usual. Some people have been financially slammed in the pandemic, while others are flush with money parked in savings. Overall spending is actually up a bit over the level of a year ago. What will it all mean for holiday spending in 2020? For some insights, let’s check in with financial planner Shannon Lee Simmons of the New School of Finance. Here’s an edited Q&A we did by e-mail:

Q: Based on your interactions with clients, do you see them splurging with their holiday spending or playing it cautious?

A: I see caution. I see a lot of people doing more extravagant gifts, but less of them. Many are trying to make it special the best they can. One interesting thing a parent said to me is that during lockdown, they hadn’t lost their jobs and were financially OK. They needed to keep their children entertained and felt the kids got so many new toys and gadgets during lock down that ‘Christmas had come early.’ These parents plan on keeping it low key this year as a result. Those who lost their job and are on government support right now will be playing it cautious as well.

Q: What guidelines can you offer to help people enjoy themselves over the holidays without a credit card debt in January?

A: Remember that holiday spending usually consists of much more than just gifts. Hosting gifts, extra groceries for parties, taxis, maybe a new outfit for a holiday party. All of those aren’t happening this year. Without all the extra, ancillary costs of making merry, you have a lot of control over the cost of the holidays this year in a way that you may not have felt before. I don’t think people have expectations this year, either. It may be a good year to reach out to loved ones and suggest something new. Secret gift exchange so you only purchase for one person. A home-made gift exchange. Best gift under $20. I think people are open to non-traditional forms of gift giving in a way that is unprecedented. I also feel like we know the true meaning of the holidays this year. It really isn’t about stuff, is it? It’s about being with people. We feel this keenly because we won’t be able to be with those people that we usually take for granted. I think finding ways to feel connected this holiday season will be the best gift.

Q: If someone does end up with credit card debt, what’s the best approach to getting it paid quickly and minimizing that 19.99 per cent interest rate?

A: Consolidate if you can on a line of credit with a lower interest rate. If you don’t have a line of credit, be sure to pause any other type of savings you may be doing and focus on paying the credit card down. I’m not usually a fan of extreme budgeting - in fact, I think it often leads to more spending. However, one small exception could be January. Not much goes on. Many people do ‘dry January’ and, with the pandemic, we can expect the lowest number of outings in recent history.

Q: Have any of your clients bought a house in the pandemic; if so, are you noticing any strain on their finances?

A: OMG, yes! Cottages, too. Many of my clients moved up their timelines for buying – maybe they were on a plan for two to three years, and then they bumped it up to now. A strain on finances when you purchase your first home is so normal. Nothing out of the ordinary.

Q: How has demand for financial planning tracked in the pandemic - how much busier are you?

A: We are much busier. When lockdown first happened in March, we saw an immediate pause. A collective holding of breath. But then, when people realized this wasn’t ending after two weeks, we saw a massive surge that hasn’t let up.