BMO Real Financial Progress Index: Canadians' financial confidence dips as inflation continues to rise

• 61 per cent of Canadians report that inflation has had a noticeable impact on their personal financial situation
• BMO offers tips to keep up with the rising rates of inflation

TORONTO, May 31, 2022 /CNW/ - After more than a year of reporting steady confidence in their personal financial situation, Canadians are now starting to show a decline in financial confidence according to the BMO Real Financial Progress Index. The Index provides a quarterly measurement of consumer sentiment around financial confidence. Nearly one quarter (23 per cent) of Canadians see themselves as less financially secure compared to one year ago – a significant decrease in optimism from only three months ago (18 per cent) – citing the rise in inflation and consumer costs as having a major impact.

Impact of inflation 

During a time of record-high inflation across the country, almost two thirds of Canadian adults (61 per cent) report that inflation has had noticeable impact on their personal finances. Almost half of Canadian adults (49 per cent) have reported reduced savings as a result of rising costs.

The Index also found that:

• Canadians are more likely to cut general savings (36 per cent) than their retirement contributions (22 per cent).
• Gen Z (56 per cent) and Millennials (62 per cent) were most likely to make cutbacks to their savings than older generations.
• Men (24 per cent) reported being more likely to reduce retirement contributions than women (21 per cent).
• Younger Millennials (ages 25-34) were especially prone to reduce general savings (48 per cent).

"As the cost of everyday purchases, from groceries to gasoline, continue to rise across the country, it's important for consumers to review and adjust their financial plan," said Gayle Ramsay, Head, Everyday Banking and Customer Growth, BMO. "Now is a great time to seek advice from a financial expert on ways to navigate this period of high inflation, be prepared for unexpected setbacks and ensure you're on track to meet your financial goals, whether it be saving for a down payment or retirement planning."

Increased cost of living

While housing costs remain the biggest barrier to financial progress (37 per cent), significantly more Canadian adults than last quarter also see monthly bills (up 4 points to 30 per cent) and credit card debt (up 2 points from last quarter to 23 per cent) as holding them back from making financial progress.

"The fastest and broadest inflation in three decades is forcing Canadian households not just to cut back on discretionary items, such as vacations, but also to alter purchases of necessities – in particular food," added Sal Guatieri, Senior Economist, BMO.

How Canadians are offsetting increased costs of living

BMO's 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.

For more information on how BMO's products and services can help consumers make real financial progress, visit www.bmo.com.

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 the United States and Canada from March 30 to April 25, 2022. A sample of n=3,403 Canadian adults ages 18+ were collected. Quotas and weighting were used to ensure the sample's composition reflects that of the Canadian population according to census parameters. 

About BMO Financial Group

Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $1.04 trillion as of April 30, 2022, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

SOURCE BMO Financial Group

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