Gift-giving season is just around the corner, but one quarter of Canadians still haven’t paid off their holiday spending debt from last year, a recent survey has found.
Half of Canadians (51 per cent) who holiday shopped in 2022 incurred credit card debt, NerdWallet’s annual survey published last week revealed. One in four, or 25 per cent, still have not paid off those funds.
The findings of the survey, which was conducted between Oct. 3 – 5, 2023 among 1,021 Canadian adults ages 18 and older, come as Canada’s cost of living continues to soar, causing some to adjust their budgeting plans for this year.
Nearly 80 per cent of Canadians said in an Ipsos poll conducted exclusively for Global News in October that inflation and rising interest rates have had a “significant” impact on their holiday budgets. A “softening” labour market in Canada, as shown in the country’s latest job report released last week, is also part of this effect.
While three in 10 Canadians (29 per cent) said they intend to spend less on gifts this coming holiday season than they did last year, roughly half (49 per cent) said they’ll spend about the same, the Ipsos poll found.
Meanwhile, NerdWallet’s recent survey found that nearly half of Canadians who plan to purchase gifts this holiday season (48 per cent) have a strict budget for the amount they will spend. Thirty-five per cent of holiday shoppers plan to shell out less per person this year compared to years past, the results showed.
“I can’t say that I’m all that surprised by these numbers. Canadians have been feeling the pinch in their wallets for many months now,” NerdWallet spokesperson Shannon Terrell told Global News.
“It’s not just inflation. We’ve been dealing with increased cost of living. We’ve been dealing with interest rate hikes. So all of this has a cumulative effect on our budgets and on our finances as we approach the holiday season,” she said.
Some ways that Canadians plan to save are by using coupons and cashback apps, and by shopping locally or at small businesses, the survey found, and estimate they will spend an average of $656.
In comparison, a Deloitte Canada survey published last month showed that the average amount Canadians are planning to spend over the holidays this year has reached a five-year low of $1,347.
One way Canadians can ensure they don’t overspend during the holidays is to be realistic about their budget, Terrell said. That means avoiding merely picking an ideal total you’d like to spend.
“A budget shouldn’t just be an arbitrary amount that you’re pulling out of thin air. It should be directly connected to your income, to your savings. So again, how much do you actually have on hand to spend on gifts?” she said.
“One other thing you can do… is try breaking it down by person and actually set a strict budget limit per person, and that’s going to help break it down and make it a lot more manageable.”
Another recent survey found that some Canadians, particularly in Ontario, are struggling to talk about their finances.
Over half of Ontarians (57 per cent) find it challenging to open up about financial issues, the survey by BDO Canada, which was conducted in September and published last week, revealed. Of those people, 83 per cent struggle to talk to family and friends about their debt concerns.
Thirty per cent said they don’t plan on talking to anyone about their debt, while 38 per cent cite the fear of judgment and feeling too ashamed or embarrassed as the top reason for not discussing their debt.
“Most people find it very difficult to talk about debt and the financial challenges they’re facing, let alone the strategies for overcoming debt,” says Nancy Snedden, national leader of the BDO Debt Solutions practice, in a news release.
“As a result, a lot of people who are struggling feel lost and isolated, making their situation even more stressful.”
Canadians between the ages of 18-34 appear to be struggling the most, the survey found.
“For this younger demographic, the challenge to talk about financial issues, including debt, stems from knowledge gaps and low financial literacy when it comes to debt management concepts for almost one-third of respondents (32 per cent),” the release says.
© 2023 Global News, a division of Corus Entertainment Inc.