More than 35% of Canadians cut expenses due to financial pressures
More than one-third of Canadians plan to cut back on holiday spending this year as inflation, personal debt, and higher living costs weigh heavily on households, according to Neo Financial’s new report.
As the festive season approaches, financial challenges remain top of mind for many Canadians. Thirty-five per cent (35%) of respondents indicated they plan to cut back on holiday spending, driven by ongoing economic pressures, despite cooling inflation. Essentials like food, rent, and gas remain costly, making it harder for many to manage additional holiday expenses.
"Canada is in a cost-of-living crisis," said Jeff Adamson, co-founder of Neo Financial. "We’ve seen that 35% of Canadians plan to reduce their holiday spending this year, and we're committed to being part of the solution by providing top-tier cashback cards, no-fee banking, and leading high-interest savings rates."
Debt is a significant concern for Canadians heading into the holidays, with 64% of respondents carrying some form of debt and 28% owing over $5,000. Gen X faces the highest financial strain, with 61% reporting that debt will limit their holiday spending. Millennials and Gen Z are also tightening their budgets, with 42% and 39%, respectively, planning to scale back on holiday expenditures.
To cover costs, 36% of Canadians plan to use their savings for holiday shopping. Boomers lead this trend, with 45% indicating they will dip into their savings, likely reflecting a preference for avoiding high-interest debt. Millennials and Gen Z, however, are less likely to rely on savings, with only 29% and 25% planning to do so, often due to competing priorities like student loans and limited cash reserves.
The report highlights notable regional disparities in how Canadians manage holiday spending. Residents of Ontario and British Columbia, where living costs are among the highest in the country, are the most likely to use their savings (42% and 39%, respectively).
Meanwhile, those in the Prairies and Atlantic Canada are less likely to rely on savings, with just 28% planning to use their reserves, potentially turning to credit or alternative financing instead.
Debt concerns have led to widespread caution in holiday spending, with 54% of Canadians saying debt will directly impact their plans. This sentiment is driving increased adoption of budgeting practices to better manage expenses.
Read next: Neo Financial raises $360m to expand alternative banking products
Forty-one per cent (41%) of Canadians have set a holiday spending budget, while 62% are actively tracking their expenses.
Boomers are the most diligent, with 55% creating a budget and 68% tracking their spending. Millennials, while strong at monitoring expenses (72%), favour flexibility, with only 38% setting a predefined budget. Gen Z has the lowest rate of budgeting at 29%, though 54% are actively tracking their spending, reflecting growing financial awareness.
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