TORONTO, Dec. 17,
2024 /CNW/ - A special report from
the BMO Real Financial Progress Index reveals
concerns about the cost of living are affecting Canadians' spending
plans for 2025, with nearly a third (30%) planning to minimize
spending in the new year. Nearly half (46%) of Canadians say the
higher cost of living will affect their financial new year's
resolutions – a 4% increase from 2023.
BMO's special report explores how concerns about current
economic conditions have affected Canadians' approaches to
financial planning ahead of the new year and reveals:
- 2024 Financial Wrap: Amid increased concerns about the
cost of living (54%), inflation (50%) and a possible economic
recession (42%), the leading sources of financial anxiety include
concerns about overall financial situation (82%), fear of unknown
expenses (82%), housing costs (73%), family related expenses (67%)
and keeping up with monthly bills (64%).
- Ringing in Financial Optimism: Despite continued
concerns about the cost of living, the majority feel they are
making real financial progress (87%) and are optimistic about their
financial future for the upcoming year (72%). 37% feel more
financially secure than they were a year ago.
- New Year, New Goals: Over one in five (21%) Canadians
plan to create financial goals and/or a budget for 2025. Among the
69% of Canadians who have already set financial goals for
themselves, top goals include saving for retirement (58%), saving
for a vacation (47%), and paying down debt (40%).
- Planning Prognosis: Only a third (33%) currently have a
financial plan and 59% do not have a household budget for the year.
- Over a third (36%) are planning major purchases within the next
year, but one quarter of them (24%) plan to modify their purchases
to account for rising costs of living.
- Annual Review: To stay on top of financial planning and
goals, on average, 92% of Canadians review their financial plan at
least once a year.
According to BMO Economics, Canadian households can look forward
to lower borrowing costs in 2025 as the Bank of Canada is likely not finished its easing
policy. After lowering its overnight target rate by 175 bps since
June 2024 — the most aggressive move
among major central banks in that period — an additional 75 bps of
rate relief is anticipated in the first half of 2025. However,
longer-term borrowing costs, which have already fallen sharply, are
likely to decline only moderately further as economic activity
picks up.
"The new year marks a fresh start for self reflection and
improvement, and we want to empower Canadians to focus on building
good habits and making real financial progress by encouraging them
to get a head start on defining their financial goals," said
Anthony (Tony) Tintinalli, Head,
Specialized Sales, BMO. "As we look forward to the new year and its
possibilities, Canadians can work with a financial advisor to build
a personalized plan and take advantage of convenient online banking
tools to help monitor their budgets and establish good financial
habits that will set your financial future up for success."
Tips for Keeping Your Financial New Year's
Resolutions
BMO offers Canadians some tips for setting and maintaining their
financial new year's resolutions:
- Start Planning Early: Review the major events planned
for the upcoming year including birthdays, weddings, vacations,
etc. and account for the associated costs. Setting up savings goals
and recurring savings transfers into an account can provide a sense
of progress and motivation to achieve any financial goal.
- Prioritize Paying Your Future Self First: To easily stay
on track towards longer-term financial goals such as retirement,
buying a home, or a large purchase, consider automating some
savings to an investment vehicle such as a Tax-Free Savings Account
(TFSA), Registered Retirement Savings Plan (RRSP) and/or First Home
Savings Account (FHSA). Investing allows these savings to benefit
from compound interest, grow out of sight and keep up or even
outpace inflation.
- Take Advantage of Loyalty Programs: Loyalty programs
such as AIR MILES allows Canadians to get more out of their
everyday purchases by earning Miles on groceries, gas, pharmacy and
more. Miles and/or other program rewards can be redeemed and used
towards the purchase of appliances, apparel, travel and more.
- Regular Budget Check Ups: Free, digital banking tools
including BMO Insights allows Canadians to conveniently monitor
their incoming and outgoing money flow, spending and expenses that
will help build the framework to create an accurate budget.
- Seek Professional Advice: Working with a financial
planner or advisor can help Canadians develop a personalized plan
that reflects their financial goals, sources of income, time
horizon, appetite to risk and financial obligations, and make any
necessary adjustments.
Customers can build financial literacy, conveniently monitor
their financial plans, and reach their financial goals through
BMO's innovative digital tools and resources:
- BMO SmartProgress: This tool helps customers learn more
about important personal finance topics and build financial
literacy anywhere and at any time. It is a free, online financial
education platform featuring customized, interactive content,
including videos and tools, on complex financial planning topics
including budgeting and credit management, homeownership and
investing.
- BMO CreditView: Customers can quickly and easily check
their credit scores and access new tools and advice to manage their
credit profile online and on mobile.
- BMO Insights: Customers get help saving more, monitoring
spending and account values, and spotting unusual activity with 25
BMO Insights that provide customers free, quick, and personalized
views of their daily spending to help them make informed decisions.
Popular online insights include:
- CashTrack: Using artificial intelligence, these insights
monitor customers' cash flows and let them know if they will run
out of money in the next seven days.
- Spend Categorization: These insights notify customers
when there has been a significant increase in a specific spending
category or if a free trial has expired.
- BMO Savings Amplifier Account: To help make saving easy
and automatic, BMO's award-winning solution offers no monthly fees,
a competitive interest rate, and unlimited no-fee transfers to
other BMO accounts. In addition, its digital Savings Goals feature
enables customers to set, track, and manage their financial
goals.
To learn more about how BMO can help customers make financial
progress, visit www.bmo.com/main/personal.
About the BMO Real Financial Progress
Index
Launched in February 2021, the BMO
Real Financial Progress Index is an indicator of how consumers
feel about their personal finances and whether they are making
financial progress. The index aims to spark dialogue that will help
consumers reach their financial goals and to humanize a topic that
causes anxiety for many – money.
The research detailed in this document was conducted by Ipsos
in Canada from September 2nd to
14th, 2024. A sample of n=3,404 adults ages 18+
in Canada were collected via the Ipsos panel. Quotas and
weighting were used to ensure the sample's composition reflects
that of the Canadian population according to census parameters.
This survey has a credibility interval of +/- 2.4 per cent 19 times out of 20, of what the results
would have been had all Canadian adults 18+ been surveyed.
About BMO Financial Group
BMO Financial Group is the
eighth largest bank in North America by assets, with total assets
of $1.41 trillion as of October 31, 2024. Serving customers for 200
years and counting, BMO is a diverse team of highly engaged
employees providing a broad range of personal and commercial
banking, wealth management, global markets and investment banking
products and services to 13 million customers across Canada, the
United States, and in select
markets globally. Driven by a single purpose, to Boldly Grow the
Good in business and life, BMO is committed to driving
positive change in the world, and making progress for a thriving
economy, sustainable future, and inclusive society.
SOURCE BMO Financial Group