Cash-strapped and anxious Canadians planning to spend less this holiday season, BMO says

Nevertheless, Canadians are planning to spend an average of more than $1,991, according to the survey

Almost four out of five Canadians are planning to cut back on holiday spending this year, according to a recent survey by the Bank of Montreal.

Nevertheless, BMO said Canadians are planning to spend an average of more than $1,991 this holiday season, which includes expenses for travel, gifts, entertaining, decorations and more.

To combat increasing prices, 41 per cent said they’ll be spending less on fewer gifts, while 44 per cent will cut spending on other occasions, such as birthdays and anniversaries, throughout the year to save money.

“Faced with higher living costs and a rising unemployment rate, it’s no surprise that many Canadians are planning to scale back their holiday spending plans this year,” Sal Guatieri, BMO’s senior economist, said in a release.

BMO’s study also said that thinking about holiday spending gives 54 per cent of Canadians financial anxiety. Some of the leading sources behind these fears include unknown expenses, housing costs and keeping up with their monthly bills.

Gayle Ramsay, BMO’s head of Everyday Banking Segment and Customer Growth, said people are still feeling the effects of higher prices even as inflation is coming down.

“It’ll be gradual for them to start to feel it, because even though inflation is coming down, the price of food hasn’t necessarily come down yet,” she said.

BMO also said 30 per cent are not confident they can afford every item on their shopping list, but 55 per cent plan to use their credit cards and five per cent plan to use buy-now-pay-later. On average, Canadians believe it will take them three months to pay off these holiday expenses.

Ramsay recommends that to combat spending anxiety, it’s important to have a budget and set aside dedicated money for holiday spending.

“Making a list in terms of deciding what you’re going to shop or what you’re going to buy for people makes a big difference,” she said. “My suggestion is to get a budget and figure out what you’re going to buy before you go out, so you don’t end up doing impulse buying, and then track that budget.”

In another study, Rakuten Group Inc. said more than 81 per cent of shoppers under the age of 35 are planning to take advantage of Black Friday sales this season. It predicts Black Friday will be the biggest shopping event this year, and 31 per cent more Canadians are planning to shop compared to previous years.

Despite a drop in spending for gifts, BMO said Canadians are continuing to make generous donations towards charitable causes, with 33 per cent planning to contribute money and 31 per cent already giving donations throughout the year.

It also said a majority of Canadians plan on giving back to those in need, supporting charitable causes they care about and teaching their family about the importance of giving this holiday season.

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