Mackenzie "Burn Rater" Spending Test uncovers habits that could impede saving

TORONTO - Many Canadians, especially under the age of 50, are battling behaviours of overspending that could impact their saving and investing habits for the future, according to the recent "Burn Rater" Spending Test commissioned by Mackenzie Investments. Your "Burn Rate" refers to how quickly you spend your disposable income.

The test (the full text of which can be found below) asked ten questions to gauge Canadians' spending and saving behavior using the following scale: answering yes to 0-3 questions means you're a "Controlled Spender", answering yes to 4-6 questions shows you have "Overspending Tendencies", and yes to 7-10 questions means you're an outright "Overspender."

The results found 56 per cent of all Canadians less than 50 years of age demonstrate troubling "Overspending Tendencies" (32 per cent), or are outright "Overspenders" (24 per cent).

"We don't deny ourselves much these days - except for a dose of reality when it comes to our financial security," said John Dale, Executive Vice President, Mackenzie Investments. "We all spend, but managing our spending and all that goes with it, including budgeting, saving and investing, is the first step to a better retirement."

The Young and the Spenders

The younger the Canadian, the worse the spending habits. Twenty-nine per cent of Canadians under 34 answered yes to 7-10 questions on the Burn Rater Spending Test, compared to just 5 per cent of those 50-plus.

The test also revealed that over half (53 per cent) 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 per cent 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 that can impact financial health." <<

Mackenzie "Burn Rater" Spending Test results: (Take the test! www.burnrate.ca)

1) Have you gone shopping and/or bought things to make yourself feel better?

- 60 per cent of under 50 said yes; 47 per cent of 50+ said yes

2) Have you spent money in your account near the end of a pay period, because you knew you were about to get paid again?

- 40 per cent of under 50 said yes; 30 per cent of 50+ said yes

3) Have you hidden purchases from family or friends, or told someone you paid less for something than you actually did?

- 37 per cent of under 50 said yes; 22 per cent of 50+ said yes

4) Have you bought things you wanted, without considering the longer- term impact of the cost on your personal finances?

- 47 per cent of under 50 said yes; 26 per cent of 50+ said yes

5) Have you entertained family or friends at home or at a restaurant, more than you could afford?

- 31 per cent of under 50 said yes; 12 per cent of 50+ said yes

6) Have you used your credit card to buy something, when you didn't have enough money in your bank account to pay for it?

- 53 per cent of under 50 said yes; 39 per cent of 50+ said yes

7) Have you avoided looking at your bank account or balance (i.e. getting an ATM receipt) because you were concerned about how much money you've spent?

- 23 per cent of under 50 said yes; 8 per cent of 50+ said yes

8) Have you regularly bought things on the spur of the moment?

- 56 per cent of under 50 said yes; 43 per cent of 50+ said yes

9) Have you gone shopping (not including grocery shopping) two or more times a week?

- 49 per cent of under 50 said yes; 40 per cent of 50+ said yes

10) Have you focused on spending for today ahead of creating a budget or financial plan for the future?

- 40 per cent of under 50 said yes; 21 per cent of 50+ said yes

Other test results:

- On average, Canadians under 50 answered 4.35 out of 10 questions yes, compared to only 2.88 of those 50+

- Atlantic Canadians are most likely to make spur of the moment purchases and Quebeckers are the least likely, 60 per cent and 43 per cent respectively

- Women are nearly twice as likely as men to be Overspenders: 20 per cent versus 12 per cent

- Singles are almost twice as likely to be Overspenders, at 22 per cent versus 14 per cent of those who are married >>

Adds Dr. Yi, "Sometimes the simplest ideas are the best ways to curb overspending and improve your ability to save for the future. I recommend creating a spending and saving budget with detailed shopping lists and spending limits, and walking away, at least for 24 hours, when you feel the impulse to buy something that isn't on your list."

Take the Spending Test and learn how to manage your Burn Rate this year

Canadians can go to www.burnrate.ca to take the interactive Burn Rater Spending Test for themselves, and learn about the 5-step plan to curb overspending and save and invest for the future. Also gain access to free books, Podcasts and more.

Meet the "Denialers"

The family with the ultimate Burn Rate comes to life at www.burnrate.ca, Meet the Denialers. See video clips of parents Brett and Penny, kids Simon and the Denialer twins. They might remind you of someone, or make you vow to never spend like them.

More regional results are available.

Online surveys were conducted for Mackenzie Financial Corporation by Decima Research between December 17th - 19th 2007 with a representative sample of 1,169 Canadians aged 18 and over. The results are considered accurate within +/- 3.1%, (19 times out of 20).