Holidays causing some Canadians to overspend, new survey says

The holiday season is a time many Canadians gather for celebrations with friends and family and often exchange gifts — but that comes with financial pressures that could lead to overspending. 

"It's been extremely stressful, especially with inflation and everything that's going on. It's been rough," said Emily LaPorte, while out shopping at Covent Garden Market in London. 

"I'm definitely overspending. I don't think there's a way to not overspend during the holidays … I had used credit cards, I even took out some stocks because I just needed the money," said LaPorte. 

A new survey from the Chartered Professional Accountants (CPA) of Canada and BDO Debt Solutions, found 94 per cent of Canadians say they're expecting the holidays to cause financial stress — and 56 per cent of Canadians say they're relying on credit cards to cover their holiday purchases. 

Christopher Burton, a financial security advisor at Burton Financial Group, says it is a big risk for Canadians to go into credit card debt to fulfill holiday spending as interest keeps increasing.  

"The biggest risk of using credit is the interest cost on that. So, what you bought now could take you five to 10 plus years to pay off," said Burton. 

"It could end up costing you much, much more than what the original ticket price was because of the mounting interest."

Burton says it is also the same with other credit companies that provide money to clients, except the interest rates are way higher, despite their convenience.

"If you carry one of these loans over the 36 or 48 months [period], the interest cost there is into the 30 plus per cent rate."

Tips on budgeting and communicating with family, through the holidays 

After the holidays, people will soon realize through their bank and credit card statements that they've overspent, and this could begin a cycle that's hard to get out of year after year, according to certified financial planner, Sam Litchman with Millen Wealth.  

"The stress that it can cause around money is pretty damaging," he said. 

"When we're seeing prices go up for just your everyday needs … and if your income hasn't really kept up with [inflation] then that creates a lot of financial stress."

He advises to financially plan ahead of time to avoid such circumstances, and emphasizes budgeting and communicating with family members on gift affordability.

"Set a limit per individual that you're going to buy gifts for that falls within something that you can actually afford," said Litchman. 

Michelle Nordstrom, a London resident, says sticking to her budget through the holidays is a must, despite inflation, to avoid rising costs.

"If you budget, and you think about who you need to buy for [and] how much you want to spend, you're giving yourself more time to think about what your purchases are going to be," she said. 

"I find around the holiday season prices go up … It's always good to shop ahead of time without the pressure."