Concerns about the rising cost of living and a looming recession have many Canadians looking to clamp down on their spending habits after the holidays.
Thirty per cent of us are looking to minimize spending in 2025 and 24 per cent are planning to change their big purchases due to the cost of living, according to Bank of Montreal’s Real Financial Progress Index released on Tuesday.
The cost of living also has 46 per cent of us rethinking our financial goals as well, a rise of four percentage points from a year ago.
Canada’s inflation rate appears to have stabilized around the Bank of Canada’s goal of two per cent. Statistics Canada data released on Tuesday put the inflation rate at 1.9 per cent, so it has remained near the central bank’s target since August.
But many are bracing for potential difficulties ahead. The BMO survey said 21 per cent of Canadians plan to make their own financial goals for 2025, while 92 per cent of respondents already review their plan annually.
“The new year marks a fresh start for self-reflection and improvement, and we want to empower Canadians to focus on building good habits and making real financial progress by encouraging them to get a head start on defining their financial goals,” Anthony Tintinalli, head of specialized sales at BMO, said in a news release.
Canadians are feeling particularly anxious about money right now, with 82 per cent concerned about their overall finances, while 82 per cent are worried about unknown expenses and 73 per cent are concerned about housing costs.
Navigating an expensive holiday season is probably not helping matters. Canadians intend to spend $1,991 this holiday season, including travel, gifts and other expenses, according to a separate survey in October by BMO, and 23 per cent plan to spend more than $2,000.
BMO recommends starting the planning process early when it comes to maintaining your New Year’s financial resolutions, prioritizing saving in a registered retirement savings plan (RRSP) or tax-free savings account (TFSA), taking advantage of loyalty programs and, of course, speaking with a professional.
“As we look forward to the new year and its possibilities, Canadians can work with a financial adviser to build a personalized plan and take advantage of convenient online banking tools to help monitor their budgets and establish good financial habits that will set your financial future up for success,” Tintinalli said.
Despite the challenges ahead, Canadians remain fairly optimistic about their future finances. BMO said 87 per cent feel like they are making progress when it comes to their finances and 72 per cent are optimistic about their financial future for the next year.
