Ever stop to consider just how merry the holidays could be if you really did have a million dollars?
The posh parties. The exotic vacations. The luxurious gifts from stores you’ve only dreamed of walking into.
Well, wonder no more. A new survey by BMO Harris Private Banking allows us a rare chance to peek into the world of affluence and learn how high-net worth Canadians plan to celebrate the season this year.
And, based on the findings, it’s safe to say celebrations in their palatial estates are going to be fun.
According to the study, affluent Canadians (those with investible assets of $1 million or more) are planning to spend, on average, $6,463 this holiday season.
If that doesn’t seem like much, perhaps this will offer some perspective: The average Canadian will spend about $1,517 over Christmas, the lowest holiday spend in three years, according to a separate BMO study. Last year, average-income Canadians burned through about $1,810 in celebration of the season.
Investible income aside, Canadians do share commonalities when it comes to where and how we break down the holiday budget. Notably, both income groups surveyed have earmarked the largest chunk of the money to travel (though you can expect a distinct disparity in the number of stars on the hotel door). The survey found that affluent Canadians have set aside, on average, $2,230 for trips over the holidays. Those closer to middle income will spend about $700.
Overall, many average-income Canadians are having to pull their belts in a little tighter this year, with BMO economists pointing the finger at slower-than-anticipated job growth and a rise in household debt. The result is a 19-per-cent drop in the amount of money spent on gifts this year ($551) compared to Christmas past ($678). Money spent on entertainment is expected to fall from $282 a year ago to $211 in 2014.
Affluent Canadians, meanwhile, will spend about $2,230 on gifts and $1,202 on entertainment this year.
More than half of wealthy respondents (52 per cent) are expecting to buy gifts for six people or more, with an average of $274 spent on each gift. A quarter of those surveyed said they plan on spending more this holiday season than they spent prior to the 2008 recession.
This is the first-year BMO has polled affluent Canadians on their holiday spending plans.
The survey found that charities also stand to win big from festive feelings of the season, with high-net worth Canadians planning to donate an average of $2,037 to various causes during the holidays.
Two thirds will be donating the same amount this holiday season as they did last year; 15 per cent plan on donating more.
More than half will donate cash (57 per cent) and clothing (53 per cent); 47 per cent will donate canned food or food baskets and 32 per cent will do some form of volunteer work.
Marvi Ricker, vice president of philanthropic services at BMO Harris Private Bank, said wealthy clients are inspired to donate for all kinds of reasons, including as a means to reap a tax benefit.
However, most people are driven by a desire to have a positive impact on their community or on an issue that’s important to them.
“They know they’ve been lucky,” Ricker said.
The survey found that the vast majority (89 per cent) of affluent Canadians have given to a charity in the past 12 months, donating on average $5,822.
Some are even more generous.
“A couple of days ago, I spoke with someone with a donation of $10 million,” Ricker said. “It’s just in the air to be giving at this time of year.”