Written by Kelley Keehn
Friday, January 12th, 2018
As we reach the middle of the first month of the new year, you can be honest — are you feeling a little blue? Many Canadians are: the third Monday in January is considered the saddest day of the year.
The Financial Blues Survey from Credit Canada and the Financial Planning Standards Council (FPSC) found that more than half (53%) of Canadians are already feeling financially blue, with younger generations especially struggling.
"We're seeing a lot of buyer's remorse from people coming to us after the holidays," says Laurie Campbell, Credit Canada CEO. "People overspent and don't know how to deal with the extra debt. If you can return any unused items you bought or received over the holidays, that's ideal. But if no returns or refunds can be made, you need to move forward and stay focused on your goals."
The two non-profit organizations co-sponsored the Leger poll, which asked 1,550 Canadians earlier this month the following question: "When it comes to your finances, what makes you blue at this time of year?"
Here are some of the standout findings:
- More than one in five Canadians (20%) has a credit card balance larger than their savings account.
Younger adults aged 18-44 are especially blue about finances at this time of year (68% versus 41% for aged 45 and older).
- One in four Canadians (25%) don't have funds to escape the winter doldrums through a vacation.
- Six per cent of Canadians have already broken their financial new year resolutions.
"We know mid-January people start getting their bills for the spending they did over the holidays, and this usually throws everyone into a panic," says Campbell.
"There's still time to change the road you're on." -Led Zeppelin
"If you want to avoid Blue Monday next year, you need to start preparing for the holidays now," says Campbell. "That means putting money away every month into a separate savings account for your 2018 holiday spending. This will help you avoid debt next year. Holiday spending was up 8 percent, so plan to save about $1,000 by next December."
Laurie Campbell's Tips to Combat Financial Blues
1. Don't panic. It's better to deal with the problem sooner rather than later. Know that it will take time (and patience) to turn your financial situation around. Involve your family and partner and discuss how you can tackle this together.
2. Get a plan. Set goals for yourself that support your long-term success, so you have a clear idea of where you're headed financially.
3. Create a monthly budget or spending plan. If you don't have one, make one. You need to know where your money is going and monitor your spending. There are free resources online to help you build a monthly budget.
4. Qualify your debt. Pay off high-interest debt first while continuing to make at least the minimum payments on your lower-interest debt. It may be worth considering a consolidation loan or line of credit at a lower interest rate to pay off all of your debt at once.
5. Take a break from using credit cards. Don't add to your debt. Challenge yourself to refrain from using your credit cards, at least while you pay off any extra holiday debt owed. Consider using debit instead. You may also want to think about cancelling any credit cards that you're not using that are charging you an annual fee.
6. Cut expenses where you can. Limit your spending to just the essentials, like groceries and other necessities. Consider cutting out any gym memberships, subscriptions or services that you no longer use. Think about whether you want to limit daily coffees and lunches, dining out, and consider switching to a cheaper mobile plan. You can use a free Budget Calculator to identify other areas you can cut.
7. Boost your savings. That might mean selling items you no longer use or taking on a part-time job or side gig.
8. Monitor your progress. Keep track of how much you're spending and saving and the amount of debt you've paid off. It's important to see (and celebrate) the small successes to help you stay motivated.
If you have uncontrollable debt or need to gain control, take advantage of free services and resources whenever possible. Non-profit credit counselling agencies, like CreditCanada.com, offer free credit and debt counselling services. They'll create a budget for you and a plan of action to get you where you need to be.
If you need help determining appropriate actions towards your goals, you may want to seek out expert assistance from a CFP professional. Regardless of your situation, you deserve financial wellness in 2018 and you're never too young or old to get started.