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BMO Real Financial Progress Index: Nearly eight in 10 Canadians making big changes to holiday spending given higher inflation; sharp decline in financial confidence

December 15, 2022 | Customers, Financial inclusion

The latest BMO Real Financial Progress Index finds 77 per cent of Canadians say inflation is impacting their holiday spending decisions. Overall financial confidence significantly dropped, with 69 per cent of Canadian adults feeling confident compared to 75 per cent a year ago.

As Canadians continue to feel the pinch of inflation on their finances, they are turning to a variety of spending changes to offset the impact of the current economic climate this holiday season. BMO’s survey found that:

  • 37 per cent say they will purchase less expensive gifts;
  • 33 per cent will reduce big purchases;
  • 24 per cent plan to spread purchases over several months and;
  • 28 per cent will trim their gift recipient lists to save money.

This holiday season, 41 per cent of Canadians plan on travelling domestically, with 21 per cent now planning to spend less on travel due to inflation. Just over one third of Canadians (35 per cent) plan to travel internationally over the holidays with 18 per cent saying they now plan to spend less.

What’s more, 42 per cent plan to modify or push back major purchases that they were planning to make this year including the 63 per cent of Canadians who no longer intend to move forward on large purchases such as buying a car or home. Younger Canadians (age 18-34) report being more likely to rely on their savings, debit cards and buy now, pay later (BNPL) programs to pay for this year’s holiday gifts.

Financial Anxiety Remains High

A large majority of Canadians (82 per cent) say their financial situation is causing them increased anxiety. The most significant sources of financial anxiety, according to the survey, include housing costs (71 per cent), fear of unknown expenses (84 per cent), and family-related expenses (68 per cent).

In addition to the top causes of financial anxiety, Canadians also report:

  • 51 per cent of Canadians say credit card debt is causing financial anxiety, with 68 per cent of those age 25 to 34 reporting they are struggling to pay.
  • 54 per cent of Canadians aged 45 to 54 report keeping up with medical bills is causing them financial anxiety.

“The impact of inflation on Canadians’ finances is having a direct impact on how people shop this holiday season,” said Gayle Ramsay, Head, Every Day of Banking, Segments & Customer Growth, BMO. “In addition to setting and following a holiday budget this year, it is crucial for Canadians to create a financial plan for 2023. As we head into the new year, a key to alleviating financial anxiety will be learning how to protect financial progress you have made already, and how to continue making progress through a challenging economy.”

Outlook for 2023

Looking ahead to the new year, nearly half (43 per cent) of Canadians say their financial New Year’s resolutions have changed because of inflation – with 60 per cent of younger Canadians aged 25-34 reporting their resolutions have changed compared to just 22 per cent of those over the age of 65.

 “Given the highest inflation in four decades and the fastest interest rate increases in three decades, it’s not surprising that Canadian families, especially younger ones, are feeling substantial strain on their finances and well-being,” said Sal Guatieri, Senior Economist, BMO. “The relatively good news is that policy rates are expected to stabilize in 2023 as inflation slows, setting the stage for potentially lower borrowing costs in 2024.”

BMO offers the following tips to help Canadians make real financial progress and navigate the inflation as the new year approaches:

  • Utilize digital banking tools and apps to help track spending patterns and save. BMO’s mobile banking app features digital capabilities focused on helping our customers make real financial progress, including Savings GoalsPre-authorized Payment Manager, BMO Insights, and BMO CashTrack. If you’re looking for more guidance, BMO offers our customers Real Financial Progress Checks – go into your branch and a banker can discuss your financial goals and give advice based on your individual situation.

  • Choose customized products that help you get the most out of travel like the BMO Ascend World Elite Mastercard. The Index shows that 31 per cent of Canadians plan on adjusting or canceling their travel plans this holiday season. Choosing the BMO Ascend World Elite Mastercard gives you the highest rewards points for travel in Canada, providing cardholders five times the points for every $1 spent on eligible travel purchases.

  • Reconsider big-ticket purchases. BMO data shows 42 per cent of Canadians plan to modify or push back big-ticket purchases that they were planning to make this year, which is a good idea if you have not already created a budget or savings plan for a large purchase. If specific purchases can’t wait, consider BMO PaySmart, a credit card installment plan feature that allows customers to turn eligible credit card purchases over $100 into smaller, interest-free monthly payments with a low fee. 

  • Finally, speak with an expert to make sure your savings and spending patterns are on track to reach goals such as buying a house or car. A banker is there as a free resource to help.

To find out how BMO can help customers make financial progress, visit:

About the BMO Real Financial Progress Index

Launched in February 2021, the BMO Real Financial Progress Index is an indicator of how consumers feel about their personal finances and whether they are making financial progress. The index aims to spark dialogue that will help consumers reach their financial goals and to humanize a topic that causes anxiety for many – money. The research detailed in this document was conducted by Ipsos in Canada from October 24 to November 28, 2022. A sample of a sample of n=3,400 adults ages 18+ in Canada were collected. Quotas and weighting were used to ensure the sample’s composition reflects that of the Canadian population according to census parameters.

BMO Real Financial Progress Index (Canada) December 2022
BMO Real Financial Progress Index (Canada) December 2022

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