CHICAGO, IL--(Marketwired - Dec 13, 2013) -
- While most families (85 percent) say they have a of budget in place, a majority say they often spend more
- BMO Harris Bank offers tips for keeping spending and debt in check
A new survey released today by BMO Harris Bank shows that while a majority of parents with young children set a holiday spending budget, 56 percent still go over their limits and 16 percent take on debt.
The inaugural holiday spending report from BMO Harris Bank, which surveyed parents with children under 10 years old, found that:
- 38 percent of parents have a fixed budget, and 47 percent say they have a flexible one
- Only 13 percent of parents have not created a budget for holiday spending at all
- Six-in-ten (58 percent) make impulse purchases during the holiday season
- The 'holiday hangover' affects 37 percent of parents, who say they regret how much they spend come January
"The holiday shopping season can be a particularly expensive time of year, and as parents open their wallets it's important that they shop within their means. It's encouraging to see that most have a budget in place, but sticking to it can be the hard part," said Chris McComish, Executive Vice President and Head of Retail Banking, BMO Harris Bank. "If you do take on debt to pay for gifts, then make sure that January is a month of belt tightening and that you have a plan in place to pay it down early into the new year. Online tools, such as our newly designed BMO Harris Total Look, are an easy way to keep track of where you money is going and ways to manage your debt."
The survey found that the primary reason parents said they are willing to go into debt is that it's the only time of the year they spend outside their budget. Many parents (52 percent) cited a lack of disposable income for everything they plan to purchase, and 38 percent said they will make up for it in the new year. Over one third (39 percent) said social pressure to spend and celebrate during the holiday contributed to their reasons for taking on debt.
Michael Gregory, Head of U.S. Economics, BMO Capital Markets, noted that after several years of curbing their credit appetites, households finances are now in much better shape. Combined home mortgages and consumer credit peaked near 124 percent of after-tax incomes at the end 2007 and the ratio finally slipped below 100 percent at the end of 2012, where it seems to be stabilizing.
"Having gone through this multi-year restructuring, it's important that consumers maintain healthy balance sheets by using credit cautiously, making sure their payments fit well within their family budgets not only at current interest rates but should borrowing costs rise in the future," Mr. Gregory added.
- Cut the Extra Trimmings: Keep an eye out for the inevitable sales that come out around Black Friday, Super Saturday and Cyber Monday. Suggest doing a gift exchange rather than getting presents for each person
- Use Tools to Stay on Track: BMO Harris Total Look is an online tool that lets you set spending and savings goal and keeps track of where your money is going
- Plan Your Travel: If you're flying to see family, book early or be flexible with your dates and times to get the best deal. Or, consider a "staycation" and spend the holidays in your hometown
- Pay off Debt Early: Make more than the minimum payment on your credit card debt, which will knock down the amount of interest you'll pay over time. This will also help to free up credit, which can improve your credit score.
The BMO Harris spending survey was fielded online between November 22nd and 29th. In total, 993 parents with children under 10 were interviewed. Results for a probability sample of this size would be accurate to ± 3.1%, 19 times out of 20.
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris Bank® is a trade name used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Fina ncial Group, a North American financial organization with approximately 1,600 branches, and CDN $537 billion in assets (as of October 31, 2013).
For media inquiries, please contact: