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Canadians Are Shopping Without a Plan for Post-holiday Debt
Canadians are shopping impulsively and overspending during the holidays, according to a recent national survey conducted by Rates.ca. Among impulsive shoppers, 73% of Canadians admitted they were likely to buy gifts for friends, while another 69% reported they were likely to buy meals on impulse.
That’s why it’s not surprising 49% of Canadians reported overspending on the holidays last year. However, a worrying 40% of Canadians admitted to shopping without a plan to pay it off later.
These numbers reflect the lack of financial literacy regarding credit products and the impact it has on Canadian families after the holidays.
Impulse Buys Regional Breakdown
Some provinces are more generous than others. Atlantic Canada, Manitoba, and Saskatchewan are most likely to buy gifts for others on impulse (83% respectively). While, British Columbia is the least likely (65%).
Percentage of Canadians who buy gifts for others vs themselves on impulse:
| Province | Gifts for others | Gifts for themselves |
|---|---|---|
| Atlantic Canada | 83% | 33% |
| Quebec | 73% | 46% |
| Ontario | 71% | 39% |
| Manitoba/Saskatchewan | 83% | 38% |
| Alberta | 74% | 41% |
| British Columbia | 65% | 36% |
Manitoba and Saskatchewan aren’t just generous they are also charitable, with 27% likely to make impulse donations, along with Alberta. On the other hand, Quebecers (46%) are more likely to buy gifts for themselves on impulse than the rest of Canada (38%).
The provinces that are most likely to make these impulsive purchases are:
| Province | Impulse Purchase | Provincial Average | Canadian Average |
|---|---|---|---|
| Atlantic Canada, Manitoba, Saskatchewan | Gifts for others | 83% | 73% |
| British Columbia and Ontario | Meals | 71% | 69% |
| Quebec | Entertainment/Events | 50% | 48% |
| Quebec | Gifts for self | 46% | 40% |
| Alberta, Manitoba, Saskatchewan | Charitable donations | 27% | 24% |
| British Columbia | Travel | 25% | 18% |
Household Holiday Spending
Nearly half (49%) of Canadians overspent on the holidays last year, with 12% of those spending $500 or more than they planned. Only a fraction of shoppers (5%) stated they underspent. However, 32% of respondents reported sticking to their budget.
How Canadians spent last holiday season:
| Spent on holidays last year | Age <55 | Age 55+ | With children <18 | No children <18 |
|---|---|---|---|---|
| Overspent | 51% | 44% | 60% | 44% |
| Overspent by less than $100 | 15% | 12% | 14% | 14% |
| Overspent by $100-$499 | 24% | 20% | 29% | 20% |
| Overspent $500+ | 12% | 12% | 17% | 10% |
| Right on budget | 30% | 37% | 24% | 36% |
| Underspent | 5% | 5% | 6% | 5% |
| Underspent by less than $100 | 2% | 2% | 2% | 2% |
| Underspent $100-$499 | 1% | 2% | 2% | 1% |
| Underspent $500+ | 2% | 1% | 2% | 1% |
| Don’t know or prefer not to answer | 14% | 15% | 10% | 15% |
A household breakdown of these numbers points to families with children feeling the pinch the most. More specifically, 60% of families with children under the age of 18 reported overspending on the holidays last year. This may be related to advances in technology, high tech toys, and brand reach, creating higher expectations around the holidays.
How Canadians Managed Holiday Debt
Over half (54%) of Canadian holiday shoppers have a plan on how to pay for impulsive holiday spending. However, 24% of Canadians dipped into their savings to reduce this debt.
Almost a quarter (21%) of families with children under 18 sacrificed in other areas to manage their celebration-related debt.
Meanwhile, Canadians age 55 and over and those without children are indifferent about holiday debt. Fifty-one per cent of Canadians aged 55 plus were more likely to ignore this debt compared to those under 55 (34%). Similarly, Canadians without children under the age of 18 were far more likely (46%) to do nothing about their holiday-debt compared to those with children (27%).
How Canadians approached their debt following the holidays:
| Debt management | Age <55 | Age 55+ | With children <18 | No children <18 |
|---|---|---|---|---|
| Spent less in other areas | 35% | 23% | 39% | 27% |
| Took money out of savings | 23% | 25% | 25% | 23% |
| Paid the minimum on my credit card statement | 15% | 9% | 18% | 11% |
| Created a new stream of income | 8% | 2% | 10% | 5% |
| Opened a transfer balance credit card to manage my credit card debts | 7% | 3% | 9% | 4% |
| Increased my credit card limit | 6% | 2% | 8% | 3% |
| Took a personal loan to consolidate debt | 5% | 1% | 7% | 3% |
| Borrowed money from friends and family | 5% | 1% | 6% | 2% |
| I didn’t do anything | 34% | 51% | 27% | 46% |
| Don’t know or prefer not to answer | 7% | 5% | 7% | 5% |
How to Plan for Holiday Spending
It is important to make lists and set a budget before you start your holiday shopping. It can be easy to put a gift in your cart for the mailman, your kid’s teacher, your great-aunt twice removed, and your best friend’s dog. But $5 here and there can really add up. Cutback on the unnecessary items and remember if you didn’t plan for it, don’t buy it!
According to Statistics Canada, the average annual net saving for all Canadian households was just $852 in 2018 — leaving no room for impulsive spending.
This is what you can do to stick to the budget:
- Make a list: Decide in advance on who you want to buy for and the value of the gift.
- Set a budget: Set aside money each week in advance of the holidays. If you planned for the items on your list and you find an item on sale you may end up underspending.
- Use your rewards: Cashback and rewards credit cards typically offer points or money-back that you can use toward your credit card balance or merchandise. Consider using your rewards towards holiday purchases or paying down your post-holiday debt.
This can help you avoid unexpected surprises on your next bill and avoid gaining interest on your credit card balance.
However, if swiping your credit card comes too easily, consider reducing your credit limit or leave your cards at home. Carrying cash can be a good visual representation of just how much you are spending.
About the Survey
An online survey of 1,593 Canadians was completed between October 4-7, 2019, using Leger’s online panel. The margin of error for this study was +/-2.5%, 19 times out of 20.
Hayley Osmond, Freelance writer
Hayley Osmond is an editor and writer in the personal finance space, where she uses her eight years of media and marketing experience to bring content to life. She specializes in money products, including mortgages, home and auto insurance, and credit cards. Hayley holds a Broadcast Journalism diploma from Sheridan College and was awarded the Shaw Media Journalism and Media Award for graduating at the top of her class. Her work has appeared in Global News and diverse digital corporate training materials behind the scenes.
Hayley is passionate about making complex subjects, such as home buying and financial literacy, concise and intriguing. Her work has garnered media coverage from The Globe and Mail, blogTO, Yahoo! News, and CityNews 680 and has been syndicated across other publications.
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