Canadians are being urged to keep a close eye on their holiday spending amid concerns about high levels of debt and a tendency to make pricey impulse purchases.
According to an online survey of 1,593 Canadians by Rates.ca, a website that compares insurance and money-related product rates, nearly half of respondents overspent on holiday purchases last year, with 12 per cent spending at least $500 more than anticipated.
On top of that, the survey found many Canadians don’t have a plan on how to pay for those holiday shopping sprees. While 54 per cent said they had a strategy to manage holiday-related debt, not everyone is on the same page. The survey found that 51 per cent of Canadians aged 55 and older plan on ignoring holiday debt, while just 34 per cent of those under the age of 55 plan on doing the same.
“It’s concerning because when you impulse buy, you’re bound to overspend, and when you overspend, it’s going to leave you with a pretty hefty holiday hangover come January,” Sara Kesheh, vice president of money at Rates.ca, said in an interview with Yahoo Finance Canada.
“It contributes to the overall debt levels we’re seeing.”
Many Canadians are grappling with high levels of household debt while struggling to squirrel away savings, something that Kesheh warns can be exacerbated during the holiday season without careful planning. A survey conducted by Ipsos Reid for MNP found that 29 per cent of Canadians don’t have enough cash to cover their bills and debt each month.
So it’s perhaps unsurprising that many Canadians plan on spending less over the holidays this year. According to an Equifax Canada report released Monday, more than half of Canadians (55 per cent) will spend less on holiday shopping in 2019 than in previous years. As many as 58 per cent of those between the ages of 35 and 44 reported feeling concerned about their current debt levels going into the holiday season, compared to 46 per cent for the general population.
This comes as total debt per consumer increased by 1.9 per cent in the second quarter of 2019, Equifax said.
“These survey results illustrate that many people are feeling the pinch and plan to rein in their holiday purchases this year,” Julie Kuzmic, Equifax Canada’s director of consumer advocacy, said in a statement. The online survey polled 1,566 Canadians between Sept. 20 and 23 by Leger.
“If there’s a silver lining here, it’s the fact that most Canadians remain conscious of their debt obligations and want to avoid adding too much debt heading into the new year.”
Still, it appears the temptation to spend over the holidays might be too much to resist for some.
Other surveys are in stark contrast to the Rates.ca and Equifax Canada results, and have found that Canadians actually plan to ramp up their spending habits as they go into the holiday season. A survey conducted by PwC Canada found that Canadians are looking to spend more than they did last year, despite mounting concerns about a potential recession and high levels of household debt.