Almost half of the respondents say they are willing to spend more this summer
It's summertime, and most Canadians are willing to spend more this season, according to a new special report from the BMO Real Financial Progress Index.
Based on the BMO Economics survey, Canadians plan to spend more on vacations and/or travel (20%), home renovations (15%), weddings for family and/or friends (10%), and special events such as graduations and showers (9%) this summer compared to last year. The survey also shows that nearly half of the respondents – or 48% – said that they are willing to spend more than they should, this summer.
Growing economy, interest cuts open the door for spending
It was thanks to the improving economy and slowing inflation rate, Canadians have some money to spare. The recent interest rate cut by the Bank of Canada signalled the “green light” for people to loosen their finances and splurge a little bit. The central bank is expected to do at least two more cuts this year and several cuts next year. However, experts also said that these cuts depend on the US Federal Reserve’s decision as it continues to maintain the borrowing rates between 5.25% - and 5.5%.
“Inflation is showing continued signs of calming, opening the door for further rate cuts by the Bank of Canada," said BMO senior economist Sal Guatieri, "Lower borrowing costs and slower-rising living costs should provide sufficient relief to support moderate 2% growth in consumer spending this year and next.”
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The BMO Real Financial Progress Index has explored most Canadians’ summer spending plans and even their spending forecasts:
- Sizzling Summer Travels – 20% of Canadians plan to spend more on summer travel, while 38% plan on spending the same as in 2023. On the other hand, 15% of the respondents said that they plan on spending less than last year.
- Overcast Conditions for Celebrating Milestones – Nine percent (9%) of the respondents say that plan to spend more on weddings. This goes the same with special events such as graduations and showers (9%) for family and friends. Meanwhile, 22% of Canadians plan to spend the same on weddings for family and/or friends and 27% intend to spend the same as last year on special.
- Ramping Up Home Renovations – Fifteen percent (15%) of the respondents plan to spend more on home renovations, while 24% will spend the same as last year. On the other hand, 13% intend to spend less on home renovations in 2024.
- Summer Splurges – Some of the respondents say, they plan to make a large purchase this year, including buying a new car; 18% plan to spend the same; and 10% plan to spend more than they did in 2023.
- Climbing Summer Camp Costs – The survey also showed that 15% of parents with children under the age of 18 are planning to spend more on summer camps and/or childcare while 36% intend to spend the same as last year.
Do not go overboard
Another interesting note about the new BMO report is that 85% of the respondents believe that they are making real progress when it comes to their finances while 15% admit that impulsive buying is hampering their financial growth.
Hence, there is a need to spend with caution, said Gayle Ramsay, BMO head of Everyday Banking, Segment & Customer Growth.
“Too much fun under the sun without a budget can lead to overspending and you may find yourself drifting away from your financial goals. Working with a professional advisor can help Canadians build a personalized financial plan that allows them to enjoy the summer while staying on track towards their goals and make real financial progress with confidence” Ramsay said.
