Canadians are planning to cut in groceries, driving and vacations

Canadian banks say that Canadians will change how they shop for groceries, and they will be dining out less to save money. Gayle Ramsay, BMO’s Head of Everyday Banking & Customer Acquisition, told us that the latest Real Finance Progress Index shows that “81 per cent Canadian adults plan to adjust their lifestyles in response to increased cost. At the grocery store they are looking for cheaper items and buying only the essentials”.

But the changes won’t stop here. The high cost of gas is making them to consider driving less. But the entertainment industry will also pay the price: “29 per cent are spending less on vacations or canceling them altogether and 23 per cent are taking measures such as canceling subscriptions to the gym, cable, etc.”, informs Ramsay. If you already tried everything and you don’t know where else to cut, here’s some advice: review your budget again and your expenses, cut on your bank account fees and monitor your spending. Serving customers for 200 years and counting, BMO is the 8th largest bank, by assets, in North America and has 12 million customers.

Milénio Stadium: How are the Canadian banks dealing with this new global economic crisis?
Gayle Ramsay: At BMO we are focused on helping our customers make real financial progress by offering advice and solutions to help pay down debt and save money. We encourage our customers to meet with a BMO Financial Advisor to make a plan that best suits their unique financial needs. BMO offers a number of tools to help consumers make financial progress including: 1) our unique Family Bundle helps families save on account fees with our one-household, one-fee approach. BMO’s Family Bundle lets your loved ones enjoy no-fee daily banking with all the benefits and privacy of separate chequing accounts. You and your family can enjoy unlimited, no-fee transactions, including Interact e-Transfer transactions. 2) available through the BMO mobile banking app, BMO Insights helps customers make better spending and budgeting decisions by providing automated, personalized, and in-context insights based on their day-to-day banking behaviour. BMO Insights enables customers to track their money, shows monthly spend snapshots and provides proactive recommendations for when they can save more or when your balance is running low. 3) BMO is providing banking support for Ukrainian families to make their transition to Canada easier with the BMO NewStart Program. This program offers banking support to help newcomers establish their finances and start building a life here in Canada.

Milénio Stadium: Since the cost of living is very high compared with annual income, are Canadians using more credit cards, or are they just cutting in some areas such as entertainment?
GR: BMO’s latest results from our Real Financial Progress Index found that eight-in-ten (81 per cent) Canadian adults plan to adjust their lifestyles in response to increased cost: 52 per cent of Canadians are changing how they shop for groceries. This includes opting in for cheaper items, avoiding brand names, and buying only the essentials; 52 per cent are either dining out less or consciously spending less when dining out; 34 per cent are driving less to offset the soaring costs of gas; 29 per cent are spending less on vacations or canceling them altogether; 23 per cent are taking measures such as canceling subscriptions to the gym, cable, etc.
In addition to the changes Canadians are already making, BMO offers the following tips to keep up with the rising rates of inflation: review and adjust your budget to incorporate inflationary prices; review your ongoing expenses such as streaming services, cable subscriptions, etc. to determine if they can be reduced or eliminated. Use tools like the BMO Insights feature on our mobile app which makes it easy to manage subscriptions – this feature highlights if you have a new or higher subscription charge and makes it very easy to review and compare your monthly spending; postpone big-ticket purchases. Some price increases may be transitory, in which case it may be worthwhile to wait; review your monthly payments such as the homeowners’ insurance policy or auto policy to ensure it is appropriate and you are getting the most for your money and meet with a BMO Financial Advisor to make a plan that best suits your unique financial needs.

MS: Where do most Canadians invest their money?
GR: BMO’s 2022 Annual Savings Study shows that Canadians are prioritizing saving as they continue navigating the challenges of the global pandemic and amid expectations of rising inflation in the coming year. BMO offers a variety of savings products to fit customer’s saving habits, budgets, and goals. We offer competitive interest rates on products such as Savings Amplifier Account which have no minimum balance requirements and no monthly fees.

MS: Are savings still one of Canadian’s favourite banking services?
GR: BMO Economics estimated that excess savings reached nearly $300 billion late last year, while disposable income increased by approximately 4.5 per cent in 2021. BMO offers a variety of savings products to fit customer’s saving habits, budgets, and goals. We offer competitive interest rates on products such as Savings Amplifier Account which have no minimum balance requirements and no monthly fees. BMO’s annual savings study found that among the 63 per cent of Canadians with a Tax-Free Savings Account (TFSA), 67 per cent contributed the same or more than they have contributed historically. Canadians are prioritizing saving as they continue navigating the challenges of the global pandemic and amid expectations of rising inflation in the coming year.

Joana Leal/MS