ST. LOUIS, MO--(Marketwired - Dec 13, 2013) -
- While most families with young children (78 percent) say they have a budget in place, more than half will often spend beyond it
- BMO Harris Bank offers tips for keeping spending and debt in check
A new survey released today by BMO Harris Bank shows that while more than three-quarters of parents with young children have a budget, 55 percent of them still go over their limits and one in five (21 percent) is willing to take on debt.
The inaugural BMO Harris holiday spending report which surveyed parents of children under 10 years old, found that in Missouri:
- 38 percent of parents have a fixed budget, and 40 percent say they have a flexible one
- 16 percent of parents have not created a budget for holiday spending at all
- 58 percent make impulsive purchases during the holiday season
- 41 percent of parents say they regret how much they spend come January
"The holiday shopping season can be a part icularly 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 Sandy Washington, Retail Vice President, St. Louis, 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."
The survey found that 71 percent of parents cite a lack of disposable income for everything they plan to purchase as the primary reason they are willing to take on debt in the holiday season, notably higher than the national average of 52 percent. Slightly less than a third (27 percent) said they're willing to take on debt because it's the only time of the year they spend outside their means, and 29 percent said they will make up for it in the new year. One in three (31 percent) said the social pressure to spend and celebrate during the holiday contributed to reasons for taking on debt.
Nationally, the survey reported that:
- 38 percent of parents have a fixed budget, and 47 percent say they have a budget that is flexible
- 13 percent of parents have not created a budget for holiday spending at all
- 58 percent of parents expect to make impulse purchases during the holidays
- The 'holiday hangover' affects 37 percent of parents, who say they regret how much they spend come January
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 th is 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, including an oversample of 91 from Missouri. Results for a probability sample of this size would be accurate to ± 3.1%, 19 times out of 20.
About BMO Harr is Bank
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 Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $537 billion in assets (as of October 31, 2013).
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