How Canadians plan to spend their money in 2024

Nearly a third of Canadians are planning to cut their spending this year as economic concerns continue to sit top of mind.

A special report from the BMO Real Financial Progress Index revealed that 30 per cent of Canadians are going down this path. In response to these rising living expenses, 42 per cent of Canadians are reconsidering their financial New Year’s resolutions, with 17 per cent focusing on setting financial goals or establishing a budget for the upcoming year.

The report also found that nearly three in five (58 per cent) will pay for their holiday bills via credit cards. On average, they believe it will take three months to repay their holiday bills, with 24 per cent lacking confidence in their ability to pay off post-holiday bills promptly.

The main sources of financial anxiety include the fear of unexpected expenses (82 per cent), concerns about their overall financial situation (81 per cent), family-related expenses (65 per cent), and managing monthly bills (61 per cent).

A majority (68 per cent) have set financial goals, which include retirement planning (59 per cent), saving for a vacation (46 per cent), paying down debt (39 per cent), and saving for major purchases (36 per cent).

BMO Economics noted that Canadian real consumer spending remained largely unchanged in the spring and summer of 2023 and is likely to stay flat this winter, as households grapple with rising debt payments and ongoing economic concerns.

But there may be relief ahead. While interest rates were unchanged in December, markets are anticipating interest rate reductions from the Bank of Canada before the summer. A moderating inflation rate and strong wage growth are also contributing positively.