Canada's Post-Holiday Hangover: Two-Thirds of Shoppers Cut Spending

TORONTO, ON – January 29, 2026 – A collective financial sigh of relief is being replaced by a tightening of belts across Canada this January. A new report reveals that two-thirds (67%) of Canadian holiday shoppers are making significant financial changes this month after a season of spending that pushed nearly one in three over budget.

The findings, detailed in “The Post-Holiday Reset Report” by financial technology company KOHO, paint a picture of a populace grappling with the after-effects of holiday generosity amidst persistent economic uncertainty. The most common adjustments are immediate and practical: 47% are eating out less, 38% are delaying discretionary purchases like clothing, and nearly a quarter are postponing travel plans or cutting back on groceries.

These cutbacks are not just a reaction to a few extravagant purchases but a necessary recalibration for households already stretched thin. The report, which combines internal spending data with a national survey of over 1,300 Canadians, suggests the holiday season acted as a pressure cooker, concentrating a year’s worth of financial strain into a few short weeks.

A Nation on a Diet: The Reality of the January Budget Squeeze

The January pullback is more than just a trend; for many, it's a necessity. The data shows that among the 33% of shoppers who went over budget, the cutbacks are even more severe. A staggering 59% of this group are now avoiding restaurants, and 50% have put a hold on personal shopping. Perhaps most tellingly, 28% of overspenders are now forced to reduce their spending on essentials like groceries and household goods.

This financial squeeze comes against a backdrop of a challenging Canadian economic landscape. While the Bank of Canada has held interest rates steady at 2.25% and headline inflation has cooled to around 2.4%, the scars of previous price hikes and high borrowing costs remain. Canadian household debt remains among the highest in the G7, with the debt-to-income ratio climbing to 176.7% in the latter half of 2025. This means that for every dollar of disposable income, the average household owes about $1.77 in debt.

This underlying fragility is reflected in consumer confidence. The KOHO report found that one-quarter of all holiday shoppers are not confident in their financial situation, a figure that jumps to 33% for those who overspent. This sentiment is echoed in broader market research, such as RBC's recent poll showing nearly half of Canadians feel exhausted or anxious about their finances, highlighting a deep divide between those who feel resilient and those who feel overwhelmed.

“The holidays don’t create stress over money — they show how tight household finances already are,” said Faye Lucas, Head of Consumer Trust at KOHO, in the report’s press release. “December put a year’s worth of financial pressure into a few weeks.”

The Invisible Hand of Social Pressure

While it’s easy to attribute holiday overspending to a lack of discipline, the report suggests a more complex, societal cause: the immense pressure to perform festive generosity. A third of all shoppers, and a significant 43% of those who went over budget, cited societal expectations around gift-giving as a major influence on their spending.

This pressure was felt most acutely by younger Canadians. Nearly half of Gen Z shoppers (49%) reported that social pressure influenced their holiday spending. Experts in consumer psychology note that this demographic, immersed in the curated perfection of social media, faces a unique burden to keep up appearances. The fear of missing out (FOMO) and the desire to participate in cultural traditions can easily override practical budgeting.

This phenomenon isn't just about peer pressure. It's rooted in deep-seated psychological drivers, from the “warm glow” effect—the genuine pleasure derived from giving—to the powerful pull of nostalgia that retailers masterfully exploit. This combination of social expectation and emotional triggers creates a perfect storm for overspending, turning a season of connection into a source of financial anxiety.

Smarter Than You Think: Strategic Credit in the Digital Age

Counter to the narrative of impulsive shoppers racking up debt on frivolous purchases, the report uncovers a more nuanced story about how Canadians are using credit. It suggests a shift towards strategic cash-flow management, facilitated by modern financial tools.

KOHO's internal data revealed that the use of tools like Pay Later financing and overdraft protection saw significant spikes during the holiday period, rising 23.4% and 24.5% respectively. Crucially, however, these spikes didn't align with peak shopping days like Black Friday. Instead, they clustered around bill payment dates.

This pattern indicates that many consumers aren't using these tools for impulsive splurges but as a deliberate strategy to bridge gaps between paycheques and due dates. They are smoothing out their cash flow to manage lumpy holiday expenses without derailing their essential financial obligations. Only 15% of those who overspent said they plan to use more credit in the aftermath, suggesting a desire to regain control rather than fall deeper into debt.

This behaviour highlights the growing role of fintech platforms in everyday financial life. By offering real-time visibility and flexible tools like automated savings, credit-building features, and overdraft coverage, companies like KOHO are equipping Canadians to navigate an economy with little margin for error. As households continue to face these pressures, the data suggests their response is not one of passive surrender but of active, intentional financial management to get back on track.