This time of year can be so overwhelming. Most of us are in recovery mode from trying to find extra money to put into RRSPs before March 1.

Not to mention trying to gain traction since last year’s credit card Christmas shopping extravaganza.
Oh, and it’s tax time.

This doesn’t have to be crunch time, though. Putting a little aside over the course of the year, rather than scrounging to do it at tax time, can save countless headaches and a great deal of stress.

Let’s say you usually spend $1,000 on Christmas. With a simple calculation, we learn that $1,000 divided by 12 months is $83.33 per month. For those of you who plan a monthly budget for expenses, it’s simply a matter of revamping your figures a little to accommodate this new savings plan.

For those who don’t have a monthly budget, it’s not too late to start now. Write down all your monthly expenses and monthly net income.

Fixed expenses, such as your cable bill or phone bill, stay the same from month to month. Variable expenses like grocery bills and transportation costs, and one-offs like charitable donations, are the ones that change.

Unexpected expenses are those larger costs that will side rail your financial plan, such as a major appliance repair, loss of a job, or a serious health issue.

Net income is the amount of money left on your pay cheque after deductions, essentially what you have left to live on. Subtract your expenses from your net income and what’s left is your cash flow until next pay day.

But not so fast — you probably haven’t considered variable expenses, such as your fluctuating monthly water bill and little Tommy’s hockey team jersey.

It’s just as important to track these variable costs. So when it comes to your monthly budget, be sure to allocate funds for both fixed expenses, like the mortgage, and variable expenses, like Tommy’s hockey jersey.

Be aware of the awful snowball effect of using your credit card for $1,000 in purchases on Dec. 1. If the interest on your card is 19 per cent, which is quite common, and you have a balance of $1,000 owing on Jan. 1, you now owe $1,015.83.

Fifteen dollars doesn’t sound like a whole lot? Watch how quickly a little expense can turn into big unexpected expenses.

Monday morning gets off to a bad start when your car battery dies and Tommy needs $100 for the annual school field trip. Next, your colleague reminds you about the $100 you promised for their child’s fundraising drive. See where this is going?

One bad morning and your credit card statement shows a new balance of $1315.83 at 19-per-cent annual interest.

But wait, your credit card provider has so kindly offered a minimum payment plan of $24.43 per month to keep you a happy customer. Based on this payment plan, it will take 10.2 years and $1663.93 in interest to pay this bill — ouch.

My point here is this, plan for the unexpected and when it happens — and it will — it’s not so painful.

Include a savings plan in your monthly budget and you’ll be well prepared when December’s holiday season rolls around. Do the same for RRSPs and you won’t be losing sleep on March 1.

Oh and don’t forget to squeeze in a little more savings each month for an emergency fund. You can never be too prepared if you blow a tire during pothole season.

Heather Tarnopolsky is a Sun Life financial advisor in Greater Sudbury.