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Consumers plan to spend less this holiday season. Here’s how BMO can help make holiday budgeting easier

October 24, 2024 | Customers

The BMO Real Financial Progress Index reveals that – amid growing concerns about the cost of living (54%) and their overall financial situation (36%) – 79% of Canadians are planning to cut back on spending this holiday season. The survey’s insights provide an outlook on Canadians’ holiday spending plans, including:  

  • The holiday price tag:  
    • On average, Canadians plan on spending more than $1,991 this holiday season, including travel ($1,802), holiday gifts ($519), entertaining ($295), decorations ($141) and other holiday expenses ($275).  
    • Nearly a quarter (23%) plan on spending more than $2,000 during the holidays.  
  • Making a list and checking it twice:  
    • 79% plan on buying fewer gifts this year, and over a quarter (27%) will cut down the number of people on their gift list. 
    • More than a third (36%) plan on buying less expensive gifts. 
  • Sleighing spending:  
    • 41% are spending less on fewer gifts, and 44% had cut back on spending on other occasions, including birthdays and anniversaries, throughout the year in order to spend more on holiday gifts.  
    • Nearly half (49%) admit to spending more than they know they should. 
  • Financial anxiety forecast:  
    • More than half (54%) say thinking about holiday spending causes financial anxiety.  
    • 30% are not confident they will be able to afford every item on their holiday shopping list. 
  • Unravelling post-holiday receipts:  
    • Over half (55%) of Canadians plan on using credit cards to pay for their holiday gifts this year and 5% plan on using buy-now-pay-later tools.  
    • On average, Canadians believe it will take them three months to pay off their holiday bills. However, 21% are not confident they will be able to pay off their holiday bills on time and 11% are not sure when or if they will be able to pay off these bills.
“While affordability and cost of living concerns will be top of mind for many this holiday season, Canadians are still finding ways to celebrate the season by reevaluating their priorities and adapting their spending habits. Ahead of the holiday parties, trips and gift exchanges, Canadians are encouraged to work with a financial advisor to help develop a personalized plan that reflects their long-term and immediate, and take advantage of the digital tools available to conveniently monitor their budgets to help alleviate some of the stress and make real financial progress.” Gayle Ramsay, Head, Everyday Banking Segment & Customer Growth
"Faced with higher living costs and a rising unemployment rate, it's no surprise that many Canadians are planning to scale back their holiday plans this year. Thankfully, the Bank of Canada is also concerned about rising joblessness and possibly undershooting its inflation target, and will likely continue to reduce interest rates through next summer. This should add some cheer to the 2025 holiday shopping season." - Sal Guatieri, Senior Economist, BMO

The BMO Real Financial Progress Index also found that while two thirds (69%) of Canadians feel confident in their financial situation, only 53% feel they are making real financial progress and one quarter (25%) feel less financially secure than they did a year ago. Concerns about their overall financial situation (82%), fear of unknown expenses (82%), housing costs (73%) and keeping up with monthly bills (64%) are among the leading sources of financial anxiety.  

The Gift of giving 

Although current economic conditions may have affected spending plans, the survey found many Canadians still plan on giving back this holiday season:  

  • The giving game plan:  
    • Among the 63% planning on giving back this holiday, a third (33%) plan to contribute money and/or donate stocks, securities and/or mutual funds to charitable causes while 17% intend to volunteer their time. 31% have already given back throughout the year. 
    • On average, Canadians plan on donating $275 this holiday season.  
  • Giving during uncertainty: Despite concerns about the cost of living, 59% say their charitable giving donations will remain the same as previous years. 
  • Reason for the season: The majority of those planning on giving back this holiday season want to help people in need (57%) and support the cause(s) they care about (51%). Nearly a quarter (23%) want to teach their children and family the importance of giving.
"Recognizing many of the charities and organizations under increased strain during these challenging times, it is encouraging to see Canadians are proving to be generous and are making incredible efforts to spread hope in their communities this holiday season. For those considering gifting their time and/or resources, working with a professional can help develop a giving strategy that allows for more thoughtful support towards the causes aligned with their values and can help bring meaningful change in our communities no only during the holidays, but throughout the year." - Lydia Potocnik, Head, Estate Planning & Philanthropic Advisory Services, BMO Private Wealth Canada

There are several ways Canadians can give back this holiday season, including:  

  • Donate directly: Donating cash or other assets such as publicly-traded securities to a charity’s general fund for unrestricted use, or to a restricted fund for a specific project.  
  • Donate through a will: Make a testamentary gift in a will by giving a set dollar amount or a portion of the estate to a charity. 
  • Establish a donor advised fund (DAF): DAFs offer an immediate income tax deduction in the year of the gift and enable the donor to distribute the funds for grant making over an extended period of time.  

BMO Real Financial Progress Index - October 2024

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