Despite the uncertainty of the pandemic, many overspent and will be trying to pay down debts for some time
Given the continued uncertainty faced by Canadian households, it may have seemed prudent to cut right back on holiday spending at the end of 2020.
But Canadians were clearly determined to enjoy the holidays after almost a year of challenging times and actually increased the amount they spent compared to the previous year; perhaps buoyed by their cash reserves.
The RBC Post-Holiday Spending & Saving Insights Poll has been tracking holiday spending for a decade and in 2020 it reached its highest amount to date with the average Canadian shopper spending $735, up from $709 in 2019.
This increase included the 25% of all respondents who spent more than they intended – those in Ontario, Atlantic Canada, and Quebec were most likely to do this.
Two thirds of those who overspent have yet to pay off their holiday bills.
For those that broke their budget, cutting back is now the focus. Most will be saving on entertainment and daily living expenses, while many will be carrying holiday spending on their credit cards for at least two months.
Savings challenge
While another recent poll showed an increase in Canadian household saving, added holiday spending will make that harder for many.
Half of respondents said they have “no idea” how much extra they will be able to save in 2021 with 22% not saving anything now and not expecting to be able to this year.
RBC introduced its NOMI Find & Save tool in 2017 to help clients save in an effortless way by using artificial intelligence to ‘find’ money that it thinks won’t be missed if it was saved rather than spent.
“When our poll asked Canadians what they would do with ‘found’ money, they had several ideas in mind – including paying down debt (35%), adding to their general savings (32%) and saving for a specific purpose (25%). Very few responded they didn’t know what they’d do with extra funds (8%),” said Niranjan Vivekanandan, VP, Term Investments & Savings at RBC.
