As Canadians feel the need to spend for summer fun, a financial advisor recommends being realistic and cautious this year.
“People have this urge because they have been locked up for the last two years. So we know they’re ready to go out, ready to spend,” BDO Canada’s Jasmin Brown told CTV News.
“Things are reopening. People are looking to spend money on travel, recreation, the outdoors, recreation,” she said. “We’re just saying exercise caution due to a few different factors.”
“Inflation is at its highest level in 31 years, which means that everything, down to the barbecue in the garden, will cost more.”
RISE IN CANADIAN CREDIT CARD DEBT
Brown also noted that household debt was at “near record highs.”
“We know people are already relying on credit cards to fill the void. And we know that interest rates are rising. So that creates a perfect storm for people to get into debt problems if they don’t care what they are spending.
Canadians’ spending on credit cards increased 17.5% in the first part of 2022, according to a Equifax press release.
The average Canadian has over $20,000 in non-mortgage debt. In total, consumer debt has reached $2.3 trillion over the past year.
BE CREATIVE THIS SUMMER
Brown says sticking to a budget is key.
“There is still time to see what you can really afford to spend this summer. I always recommend starting by looking at what comes in and what’s left after monthly bills are paid. You want to use that budget and make sure you track it as you go to control your spending. »
She also said consumers can get creative when it comes to having fun and saving money.
“You might consider a staycation rather than a vacation where you have to travel far. If you are traveling, use the websites to find a cheaper hotel. Consider buying food from the grocery store instead of eating out. Look at the creative things you can do to save money.
“You could have a barbecue in your backyard, but make it a potluck so you can share some of those expenses, because you won’t be the only one feeling the pinch.”
Brown also said people shouldn’t let the “fear of missing out” drive them into debt.
“It’s important to be realistic about what you see. You see messages about beaches, patio drinks, restaurants, but what you don’t see with this is affordability or the credit card statement. Just be realistic about what you can actually afford within your budget.
If nothing else, she said, turn off your device.
“If you are already struggling financially and find yourself experiencing FOMO, summer is a time to kick back, relax, think about unplugging. Just unplug from your social media. It will help you financially if you are prone to give in to maintain yourself or compare yourself to others,” she explained.
“Keep in mind that summer can be fun. You can have fun without breaking the bank. You just want to be on the safe side and plan as much as you can. Watch that budget and stay on track.