Television went to a shopping center in Chicoutimi. Not to see the state of despair, as Les Colocs sang, but it was still desperate to see. The report told us that a simple photo of a child with Santa Claus costs $35 to $45. Even memories are not immune to inflation.
After two Christmases riddled with health constraints, the next one will be marked by financial constraints.
And not only because Place du Royaume is charging exaggerated bills to parents whose offspring want to sit on Santa’s lap1.
More than 50% of Canadians say their expenses now exceed their income, according to a recent study by Manulife Bank. It is enormous ! And that bodes well. Because no one can generate a monthly deficit for long without facing serious consequences.
It’s not for nothing that we hear a lot about financial anguish and anxiety. From coast to coast, almost everyone admits to being concerned about interest rates (85%) and inflation (94%). Combined, these two phenomena clearly create an anxiety-provoking situation. You rarely see such high percentages in the polls.
Some people are heading straight for over-indebtedness by using more credit card(s) that are not paid off each month. Savings, whether for retirement or otherwise, take a hit. So did paying off existing consumer debt, which fell down the priority list.
In short, now is not the time to splurge to make the situation worse, especially since the key rate is likely to jump again this Wednesday, December 7, and food inflation is far from over.
The problem is that the holiday season comes with a lot of pressure and temptations.
We want to receive loved ones with a feast, bring good bottles to our hosts, offer generous gifts, spoil our children and grandchildren. It’s the age-old “What will people think of me if…”.
A trick to help you breathe easier: “don’t manage your budget based on the expectations of previous years,” suggests François Martel, regional vice-president, financial planning, Quebec – Eastern Ontario – Atlantic, at BMO. This is logical, because the context is not at all the same as before the pandemic. But that doesn’t mean it’s easy to do, I agree.
In order not to run straight into the wall, it’s time to “review the daily management of your liquidity,” suggests Mario Cloutier, head of distribution, brokerage network, at Manulife Bank.
Without pronouncing this expression used by companies, many consumers have already put this advice into practice. We are making cuts in leisure, groceries, renovations, travel. We report purchases. One in four people use their car less to save on gas.
ESG UQAM’s Responsible Consumption Barometer observes the same phenomenon. No less than 77% of Quebecers buy more products on sale, 63% prefer house brands more and 49% have changed to a less expensive grocer.
Also, more than one person in two (57%) buys less. Clothing and cosmetics are particularly badly hit.
When this is not enough, there is a way to get advice from your bank to straighten out your finances. No, its staff is not limited to selling mutual funds. In BMO branches, you encounter anxious, even panicked customers every day who don’t know their spending or their options.
We then start with the basics: determining where the money earned goes, reports François Martel.
What’s playing spoilsport right now is that people don’t realize how many subscriptions and services they pay for monthly without needing them. The financial adviser, who has no interest in the TV shows being watched, sits down and asks, “Do you need this or that subscription?”
François Martel, Regional Vice-President, Financial Planning, Quebec – Eastern Ontario – Atlantic, at BMO
Before dipping into your retirement savings for current expenses, it’s better to explore your options to reduce the interest paid on your debts. This can be done by opting for a low-rate credit card, consolidating debts on a personal line of credit or mortgage. The personal loan is also an option to consider.
The upcoming holiday season may be more frugal than others, but peace of mind is priceless.