Stretching the holiday dollar

Hey there, time traveller!
This article was published 09/12/2023 (985 days ago), so information in it may no longer be current.

Bah hum-budget! Holiday spending is down — or up — depending on the survey. Either way, after a two-year run of high inflation, the season has never been so pricey.

It’s hard to keep a good Canadian consumer down, especially when it comes to the holiday season.

For pretty much two years now, we’ve been grappling with higher than normal inflation.

Canadian consumers may be a little beaten up but remain largely unbroken as they hit the malls — or tap the screen — to do the Christmas shop.

Depending on the poll, we’re either cutting back or ramping it up.

A recent Deloitte survey shows we plan on average to spend about $1,347 per household, an 11 per cent drop, with 23 per cent intending to cut back on groceries.

“That’s due to the financial pressures that people are experiencing,” says Natasha Macmillan, director of everyday banking at Ratehub.ca in Ottawa, which recently published a report on how to save on groceries.

Another poll of Canadian shoppers commissioned by the Retail Council of Canada found we will spend more this year, a record $898 on average, mostly on gifts, up from $782 last year — though it did note nearly nine in 10 are looking to stretch their dollar further.

The best way to stretch dollars involves one word many of us might mutter with some disdain at this time of year: budget.

A recent TD study points to 70 per cent of respondents having a holiday budget. Interestingly, it also found 96 per cent expect they will overspend anyway.

Although the TD study focused on U.S. consumers, Canadians are not all that different, as recent credit card data from JD Power reveals.

It found that Americans and Canadians plan to cut back this year, much like they did in 2022, says John Cabell, managing director of payment intelligence at JD Power in Richmond, Va.

Americans and Canadians also stated that they plan to use debit more, perhaps a sign of higher debt levels on credit cards, especially in the U.S., he says.

“The big difference between the markets is revolving debt.”

In the U.S, about 50 per cent of credit card users have revolving debt — bills not paid in full every month — compared with about three in 10 in Canada, according to JD Power data.

If you pay your credit card bill in full every month, congratulations on taking advantage of one of the most convenient payment tools out there, especially given most credit cards come with perks, other than your bank fronting you money for 30 days interest-free.

The most obvious benefits are loyalty and cash-back rewards.

“But there are others that few realize they have when purchasing with credit cards, like free extended warranty and purchase protection,” Cabell says, adding other perks might include travel insurance for flights, luggage and health care.

Of course, benefits vary by credit card, but only 18 per cent of Canadians who have a card with perks — like extended warranty — know they have them.

Some of those perks can be quite handy for the season, like a one-year extended warranty beyond the manufacturers’ one-year warranty. Another is purchase protection, which can guarantee replacement of lost and broken items within 90 to 120 days of purchase.

Given the lack of awareness, actual use of perks is only about five per cent among cardholders, Cabell adds.

Canadian consumers are likely very aware, however, of the rewards attached to credit and, increasingly, debit cards. One study by MaCorr Research Solutions estimates Canadians have about $16 billion worth of rewards points accumulated.

Of course, there’s no time like the present to use them to help stick to a holiday budget.

“We spend a lot on gifts, so I plan to use my points for groceries to take one big expense off the statement going into the new year,” Macmillan says.

Other cost-saving practices are creating a holiday meal list with corresponding shopping list. The most important part is sticking to the list.

“Research shows that off-list grocery purchases can add about 20 per cent to your spend,” she says.

“So ensure you’re not shopping on an empty stomach or taking along those people, in my case my kids, who grab things off the shelf that aren’t really needed.”

Macmillan recommends using apps like Flipp to find the best deals among grocery stores. That doesn’t mean you have to dash from store to store. Many stores price-match if you show them a competitor’s deal.

“And if they don’t, you might want to rethink where you grocery shop,” she adds.

For those whose budget already feels uncomfortably tight, maybe as a result of higher interest payments on lines of credit, mortgage and racked up credit cards, it might be time to consider professional help.

Recent data for MNP’s Consumer Debt Index found that 51 per cent of Canadians are $200 in unexpected expenses away from becoming insolvent.

Licensed insolvency trustee Tanya Reynolds at MNP in Winnipeg says calls from stressed consumers increase at this time of year — though folks are more debt-curious than debt-serious, wanting to know their options as opposed to actually taking action.

“If you’re taking money from next month’s budget, and dealing with high-interest debt, you may already be in a bad spot, and so reaching out to a debt professional is a good option,” she says, noting consultations with a licensed insolvency trustee are free.

Although most people get serious after the holidays when the spending dust settles, Reynolds recommends getting creative in the meantime to stem the new year bill payment pain.

“Have a potluck instead of bearing the cost of hosting the whole family for the holiday dinner, and try DIY (do-it-yourself) gifts (as) opposed to buying,” she says.

“These small efforts can cut the cost of the holidays — and cut the stress afterward.”