TORONTO, ONTARIO — (Marketwire) — 09/25/12 — According to a BMO report released today, impulse spending is taking its toll on Canadian household balance sheets. The BMO Psychology of Spending report is the first in a series from BMO that will examine personal finance and investing behaviours among Canadians and the resulting effects.
The inaugural report on the spending habits of Canadians found the majority (59 per cent) make impulse purchases, with half (52 per cent) regretting the purchases after the fact, and 43 per cent sometimes spending more in a month than they earn.
The report, conducted by Pollara, also revealed:
“Financial anxiety is commonly triggered by larger one-time expenses, but spending on a daily basis can be the most disruptive when it comes to keeping your financial house in order over the long term,” said Lily Capriotti, Vice President, BMO Bank of Montreal. “In most cases, impulse spending is an emotional transaction. Setting parameters and tracking your daily spending can help curb behaviours that can negatively affect the larger picture.”
Ms. Capriotti noted there are a few practices Canadians can put in place to help track and control impulse spending, including setting aside savings on a regular basis, putting off impulse purchases for an hour, or using online tools to track daily spending and set limits. For example, BMO offers – an online personal financial management tool that enables customers to set and track spending limits and savings goals.
“The data shows Canadians recognize they have the opportunity to save hundreds of dollars per month and thousands per year by cutting back on non-essential items,” said Ms. Capriotti. “However, the report shows only one-in-five review non-essential purchases at the end of each month, which implies some may be avoiding the reality of how much of their money is being put towards things they do not need.”
Ms. Capriotti added that leveraging a TFSA or a high-interest savings account, such as the , can help Canadians maximize these savings.
According to BMO Economics, Canadian household debt excluding mortgages has doubled in the past decade and consistently outrun disposable income, with the debt-to-income ratio rising from 42 per cent in early 2002 to a record high 53 per cent earlier this year.
The Consequences of Impulse Spending
Demographically:
As part of its ongoing commitment to -Making Money Make Sense,- BMO has introduced various tools to help Canadians stay on top of their personal finances, including , , , and .
For more information, please visit .
The survey results cited in the BMO Psychology of Spending Report are from online interviews with a random sample of 1,000 Canadians 18 years of age and over, conducted by Pollara between August 31st and September 5th, 2012. A probability sample of this size would yield results accurate to +/- 3.1 per cent, 19 times out of 20.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
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