This is the festive season and it’s a time for gift-giving and celebrations.
The many festivities at this time of the year include Hanukkah, Bodhi Day, Yule, Festivus, Christmas, Kwanzaa, New Year’s and others.
The seasonal celebrations are not cheap. According to the Retail Council of Canada, Canadians expect to spend an average of $898 on holiday expenditures in 2023. In 2022, the estimated expenditures were $782.
It’s also easy for costs to exceed budgeted amounts. According to data from Made in CA, only two per cent of Canadians stayed within their holiday spending budgets last year. Seven per cent of Canadians overspent by more than $1,000 in 2022.
While the festive season lasts a few weeks, the effects can linger, especially for those who have borrowed or used credit to pay for their celebrations.
Collectively, Canadians added more than $800 million to their credit card debt load in December 2022, according to Statistics Canada data, bringing the outstanding debt total that year to $91.5 billion.
Later, after the celebrations are over, the debt must eventually be repaid. Paying down a holiday debt is not easy and can take a long time.
This means some individuals and families will begin the new year with an increased debt burden.
The debt payments come at the same time as other financial challenges, such as those resulting from inflationary challenges over the past year.
Debts from holiday spending can have effects beyond one’s individual budget. Someone paying down a holiday debt will have less disposable income to use for other purchases during the rest of the year.
This can have some far-reaching implications on the economy of a community.
This is not a call to ditch the holiday season or to abandon gift-giving traditions.
Celebrations are an important part of the year and can bring a level of cheer during the winter’s chill.
However, there are financial implications to the holiday season.
Repercussions from spending patterns in December can still be felt well into the next year.
The debt payments from the festive season can be an unwelcome gift that keeps on giving.
— Black Press