Be Aware of Online Shopping Habits to Avoid A Holiday Debt HangoverDec 05, 2014
With the holidays right around the corner, many of us may be excited looking forward to the thrill of holiday sales, others anxious about the toll it takes on our December finances. With inflation growing and interest rates rumoured to be on their way back up, reports indicate Canadian consumers are trying to avoid overspending on the holidays this year. The Bank of Montreal (BMO) forecasts a three-year low, with Canadians spending a little over $1500 on holiday shopping. As average consumer debt in Canada continues to grow, some may be starting to think twice about overdoing it this season. Despite our best intentions to save this year however, there is a tendency to get caught up in the ‘holiday spirit’ so it will be interesting to see how what we planned to spend compares with what we actually spent.
Besides the rush and excitement of the season, there are a number of other factors to be aware of when shopping online. Canadians can end up overspending while shopping for deals online. Sometimes the more you save, the more you buy. A Solutions Research Group survey states that 66% of Canadians plan to shop online this year, which could mean debt in the New Year for those who go beyond their budget and use credit to cover remaining gifts on the list. Diminished willpower may also be working against us. Studies suggest online shopping tempts us to spend more and lowers our capacity to control how much we spend. If that’s the case, we need to remain mindful of online shopping trends that are slowly changing our shopping habits.
As average consumer debt load exceeds $20,000 (excluding mortgages), and “deal extravaganza” events like Black Friday and Cyber Monday gain momentum in Canada, we need to be careful that we don’t end up going broke while trying to save. 28% of Canadians went into debt as a result of spending in 2013, with only 11% expecting to do the same this year. This may reflect a shift in consumer behaviour, or an indication that we are becoming more attuned to the temptation online shopping can place upon us, especially during the holidays.
By planning ahead and utilizing financial management tools and apps, you can lessen the financial impact and survive the season with your credit and bank account intact. If you are shopping online this year, avoid the temptation to overspend by loading your gift budget onto a pre-paid credit card or use your debit card via a reputable service like PayPal. Making small adjustments to your holiday spending habits like this can make a big impact at the end of the month. Give yourself the gift of healthy finances by implementing strategies today to prevent holiday debt hangover in January.
Check out Doug Jones on GoldHawk Fights Back am740 discussing Black Friday Deals and the price we pay for the convenience of shopping online.
Learn more about Dealing with Credit Card Debt.