Canadians Becoming Big Spenders

Many Canadians, especially under the age of 50, are taking on spending behaviors similar to their neighbors in the United States, according to the recent "Burn Rater" Spending Test commissioned by Mackenzie Investments. An individual's "burn rate" refers to how quickly a person spends his or her disposable income.

The test asked ten questions to gauge Canadians' spending and saving behavior. The results found 56 percent of all Canadians less than 50 years of age demonstrate troubling "Overspending Tendencies" (32 percent), or are outright "Overspenders" (24 percent). The younger the Canadian, the worse the spending habits. Twenty-nine percent of Canadians under 34 answered yes to 7-10 questions on the Burn Rater Spending Test, compared to just 5 percent of those 50-plus. The test also revealed that over half (53 percent) of those under 50 have used their credit card to buy something when they didn't have enough money in their bank account to pay for it, and 47 percent admit they have bought things they wanted without considering the longer-term impact of the cost on their personal finances.

"This study shows that younger Canadians are spending first and asking questions later," says Dr. Sunghwan Yi, a University of Guelph researcher and expert in consumer behavior, who helped develop the test with Mackenzie. "There is less social disapproval around spending money on impulse and more credit to support over-spending. This leads to a ‘spending is good, saving is less important' attitude." The study also found that people in the Atlantic Provinces, at 60 percent, are more likely to make spur-of-the-moment purchases than Quebecers, who are the least likely at 43 percent.

More information on the study can be found on MacKenzie's website. You can also take the Burn Rater Spending Test yourself at http://www.burnrate.ca.

-- Stanley Pfrang