SARASOTA, FL--(Marketwired - Dec 13, 2013) -
- While more than three-fourths of families say they have some sort of budget in place, overspending and 'buyers' remorse' often occur
- BMO Harris Bank offers tips for keeping spending and debt in check
A new survey released today by BMO Harris Bank shows that while a majority (75 percent) of Florida parents with young children set a budget for how much they want to spend over the holidays, 61 percent spend more than planned and 21 percent plan to take on debt to help fund their seasonal spending.
The inaugural holiday spending report from BMO Harris Bank, which surveyed parents with children under 10 years old, found that in Florida:
- 34 percent of parents with young families have a fixed budget for the holidays, and 42 percent say they have a somewhat flexible budget
- 68 percent say they make impulse purchases during this time of year
- 45 percent of parents, say they regret how much they spent come January, much higher than the 37 percent nationally who experience buyer's remorse
"It is encouraging to see that such a large percentage of parents have a budget in place for their holiday spending," said Dave Maraman, Regional President, Florida, BMO Harris Bank. "This time of year can be stressful, particularly in terms of the added expenses. Sticking to your budget may be the hardest part, but if you do take on debt to pay for gifts, it is important to have a plan to be able to pay it down quickly."
The survey found two primary reasons why Florida parents are willing to go into debt to help fund their holiday spending. 58 percent say that this is the only time of the year they spend outside of their budget, similar to the national average. A similar number (54 percent) said they go into debt over the holidays because of social pressure to spend and celebrate. This is above the 39 percent nationally who try to 'keep up with the Jones'.
Nationally, the survey reported that:
- 38 percent of parents have a fixed budget, and 47 percent say they have a budget that is flexible
- More than half (56 percent) expect to spend over their budget
- 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 this 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.
Visit the BMO Harris Bank Learning Center to learn more about holiday budgeting and tackling debt and other tips for managing your expenses, including:
- 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 by Pollara between November 22nd and 29th. In total, 993 parents with children under 10 were interviewed, including an oversample of 102 from Florida. Results for a probability sample of this size would be accurate to ± 3.1%, 19 times out of 20.