It’s the end of 2011 and we are in the season for giving and being merry; but while everyone is planning their outings and trips, it can get costly. Going forward, many will experience high credit card bills, followed by tax season where we never know if we owe money to the CRA or can expect money back. We want to help you this Christmas season by giving you some tips to help you manage your spending, save a little for the future, and cut down on potential income taxes for the year while you still have a chance to do so.
Set a budget
Don’t go into debt. Set a budget on how much you want to spend on gifts, on entertainment, etc. Make sure you do not overspend by using cash on all your gift purchases and anywhere else possible. Or, if you are using a credit card for convenience, keep it only for Christmas expenses so it is easier to track. Keep in mind to pay off your credit card bill on time to avoid costly interest rates, which will add to your holiday expense.
Look for Sales
There are always sales going on during the Christmas season. Look for great deals such as discounts on gifts with purchase during this time of year to help you save some money.
Think About Homemade Gifts
It’s the thought that counts! Some other inexpensive ideas are to make homemade gifts, such as baked goods, or handmade cards. If you have some extra time on your hands, it’s a great and inexpensive way to show your feelings for loved ones. Keep in mind, the ingredients and materials can get costly. So look at buying just enough, or buy in bulk and avoid spending money on presents and spend time in making things for your loved ones instead.
Low-Cost but Enjoyable Entertainment
There are tons of free and low-cost activities happening during the Christmas season that are enjoyable. Take part in these to save some money, but also take part in the Christmas cheer. For example, take a walk around the neighborhood and take part in community ceremonies such as tree lightings. Also, take advantage of corporate Christmas parties and have some fun with your co-workers.
Give and get! We already mentioned this, but it is a great way to give a gift and receive a tax credit for the year. There is no limit on how much you can donate and will help reduce your tax payable for the year. If you are expecting a return from CRA, this will increase the amount you can get as a refund, so why not take advantage of this.
Make Contributions to Registered Accounts
If you have an RRSP, TFSA, or RESP accounts, now is the time to make contributions to these to get a head start on savings. As well, contributions made to an RRSP before the end of February 2012 will be eligible for tax deductions for the 2011 tax year.
By keeping these ideas in mind, you can still enjoy the Christmas season without breaking the bank. But you may even be able to put some extra money back in from all that you can potentially save if you follow a budget. And by keeping the above tax tips in mind, you will reduce your income tax payable for the year when you file your taxes and increase your refund. Don’t forget, if you are a business owner or are self-employed, any gifts or cards given to clients and associates are tax deductible as advertising and promotion; another great way to reduce your income tax payable for the year.
We hope you find these tips useful and enjoy the Christmas season.