The BMO Real Financial Progress Index reveals growing concerns about the rising cost of living are affecting Canadians’ holiday spending plans. The survey examined Canadians’ spending plans this holiday season and found:
- Fewer Holiday Gifts:
- Four in five (78 per cent) plan on buying fewer gifts this holiday season.
- 45 per cent will spend less money on fewer gifts.
- A quarter (26 per cent) of Canadians will cut down the number of people on their gift list this holiday season.
- Over a third (37 per cent) are not confident they will be able to afford every item on their holiday shopping list.
- Financial Anxiety Forecast:
- Half (51 per cent) of Canadians say thinking of holiday spending causes financial anxiety.
- Scaling Back Spending:
- 40 per cent are buying less expensive gifts, while 35 per cent plan to reduce their spending by making fewer big purchases.
- Post-Holiday Bills:
- On average, Canadians believe it will take three months to pay back their holiday bills. As many as one quarter (24 per cent) are not confident they will be able to pay off their post-holiday bills on time.
“The holidays are certainly a time to celebrate with loved ones, but the holiday parties, family gatherings, travel and gift exchanges can also pose a financial strain – especially during times of economic uncertainty,” said Gayle Ramsay, Head, Everyday Banking, Segment & Customer Growth, BMO. “The rising cost of living will be top of mind this holiday season, but planning early, using digital tools to conveniently set and monitor budgets, and working with an expert can help Canadians stay on track, alleviate financial anxiety and enable them to continue making long-term real financial progress.”
The Bank of Canada’s recent Survey of Consumer Expectations underscored BMO’s survey findings that households fear inflation could remain high, squeezing budgets and leading to significant spending cuts. Findings from the BMO Real Financial Progress Index also found that while 68 per cent feel optimistic about their financial future (over the next year), only a third (33 per cent) believe they are making real financial progress and 29 per cent feel less financially secure than they did a year ago.
‘Tis the Season for Giving
Despite the challenging economic environment, the survey reveals Canadians are incorporating charitable giving as part of their holiday spending plans:
- Giving During Uncertainty: A third (33 per cent) of Canadians say their charitable giving will remain the same as previous years and 10 per cent consider being able to donate to the causes they care about as a sign of real financial progress.
- Giving Strategies: Over a third (35 per cent) plan to contribute money and/or donate stocks, securities and/or mutual funds to charitable causes, while 16 per cent plan to volunteer their time this holiday season.
- Meaningful Motivations: The majority of Canadians who to plan on giving back to their communities plan to help people in need (61 per cent) and support their preferred causes (51 per cent). A quarter (23 per cent) say giving back allows them to teach their children and family the importance of giving.
“The holiday season often inspires us to spread hope to our communities, and strategic giving allows Canadians to be part of the change they want to see,” said Lydia Potocnik, Head, Estate Planning & Philanthropic Advisory Services, BMO Private Wealth. “For those who have the resources and would like to make meaningful contributions that will support progress in their communities, working with professionals will allow Canadians to be more thoughtful with their giving activities, donations and volunteer work.”
For Canadians looking to give back this holiday season, there are a variety of charitable giving options available:
- 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. The BMO Charitable Giving Program is a flexible and cost-effective DAF program that enables Canadians to create a charitable giving plan in collaboration with the Charitable Gift Funds Canada Foundation.