Present pain for the pocketbook

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This article was published 23/11/2024 (644 days ago), so information in it may no longer be current.

Consumers, start your engines. That said, the engines of consumption have been revving already for the holiday season given Black Friday sales started well before its official date (Nov. 22).

Among the prepared are Vicki Panagiotou and Nancy Swain, two Winnipeg moms who are budgeting pros when it comes to the holidays. Both are branch managers at Access Credit Union, but even they feel pocketbook pressure during the holidays, especially this year.

“Everything seems to have gone up in price, right?” says Swain. “Money is tight for everybody.”

Recent surveys suggest this sentiment is widespread in Canada. That includes a CPA (Chartered Professional Accountants) Canada poll that found 94 per cent of respondents feel financial stress as the holidays approach.

CPA also discovered 56 per cent expect to use credit cards to cover expenses they can’t afford out of pocket. Even so, Canadians estimate they will spend eight per cent less on gifts this year, or $595 on average.

Business services firm Deloitte also ran a holiday spending survey, only with an opposite finding: Canadians plan to spend 10 per cent more this year over last year for all holiday costs, including gifts, travel, charity and entertainment.

“It’s not because they’re feeling richer,” says Marty Weintraub, national retail leader at Deloitte. “It’s because things cost more.”

Inflation may be back to ‘normal,’ but it doesn’t feel that way right now.

Gasoline and groceries remain higher than they once were, says Panagiotou, with less discretionary money to go around for gifts. “It’s really a good time to think whether a purchase is really something that we need or is it just something that we want?”

Of course, Christmas gifts tend to be more wants than needs, especially for families with young children.

Cash-crunched consumers have to get creative to consume more craftily.

“Budgeting is the No. 1 thing that people should do right now,” Swain says.

See how much money you have and then what bills must be paid. After that, any more left over — at least some of it — can be used for holiday needs.

It sounds simple, but a holiday budget is best prepared months ago.

Panagiotou suggests it’s not too late to start … for next year. Families can set aside $10 or $20 a week into a designated savings account that can accumulate to a sizable sum.

Of course, the weeks ahead remain to be paid for, hopefully, in full, as opposed to on credit.

CPA found about 18 per cent of its survey respondents plan to overspend, which probably means using credit cards, says Li Zhang, financial literacy leader at CPA Canada.

Canada’s youngest adult cohort —ages 18 to 34 — expressed the most stress, “but they also intend to spend the most, which tells me there are a lot of societal pressures.”

If that’s the case, they should steal a page from social media and do some loud budgeting.

“Tell everyone, ‘Hey, I’m on a budget,’” Zhang says.

Expressing a need — using whatever medium — to cut back is a subtle way of saying to friends and family not to expect a spending spree this year.

“It might be one of the easier approaches where you’re not feeling like the Grinch,” Zhang adds.

A form of loud budgeting is a frequent practice for Swain and her family.

“We sit down regularly and talk about budgeting, and what’s reasonable or not for Christmas gifts,” Swain says.

Discussions involve trade-offs.

“It’s like ‘You could have this much money in a budget for gifts or we could do this as a family together and get smaller gifts.’”

Panagiotou adds gifts do not have to involve purchasing stuff. “You could do crafts for Christmas, or do something as a family.”

For adults, these presents are often more memorable than purchased presents made overseas.

Of course, many retailers have a full-court press with continual sweet-talk to consumers to coax them out of their cash-conscientious shells.

For some retailers, “it’s the difference between being in the red and in the black,” Weintraub says, noting most shopping mall stores fall into this category. “That’s exactly why they call it ‘Black Friday.’”

Competition is fiercer than ever. For the first time in its annual survey, Deloitte asked how many consumers will use social media and online marketplaces (i.e. Temu) to buy gifts.

Only 14 per cent of respondents are using this emerging consumption source, but in general, social media is adding more spending pressure on not just traditional retailers.

Households feel it, too.

“It has really put pressure on parents to keep up (with influencers),” says Panagiotou.

Communicating the limits of household finances is critical to checking that influence.

Swain suggests one way to do that is to have children build their own budgets. “That shows them what a budget looks like and helps them grasp limitations for the family.”

Of course, another strategy is reminding them that the holidays aren’t about consumption — even if they might feel that way.

“To me it’s about family time and so it should really be about celebrating what’s important to you,” Swain says.

Joel Schlesinger is a Winnipeg-based freelance journalist

joelschles@gmail.com