Canadians expect year-end bonus

Canada’s economic recovery is tenuous and its job market is tough, but that’s no reason for Canadians to give up hope for their year-end bonuses.

In fact, one-in-four (26%) Canadians in the workforce expects to receive it, says a new BMO holiday survey.

“In this economic environment, many Canadian business owners are looking to strike the right balance between rewarding the contributions of their employees with the need to maintain efficient business operations,” says Steve Murphy, senior vice president, BMO Commercial Banking. “One thing we know, from talking with entrepreneurs, is the importance they place on their employees and the role they play in their companies’ success.”

Read: Canadians will be more frugal in 2013

Receive Year-end Bonus?

	National	ATL	QC	ON	MB/SK	AB	BC
Likely	26%	25%	23%	32%	22%	29%	17%
Not Very Likely	16%	26%	15%	15%	21%	15%	13%
Not at All Likely	17%	16%	12%	17%	22%	20%	26%

Of those who believe they are likely to receive year-end compensation, 60% anticipate it will be the same as last year, 26% believe it will be more, and only 14% think it will likely be less than last year.

Size of Bonus — Compared to 2011

	National	ATL	QC	ON	MB/SK	AB	BC
Same	60%	51%	60%	65%	47%	69%	37%
More	37%	28%	22%	22%	38%	28%	48%
Less	14%	21%	19%	13%	15%	3%	15%

The study shows 26% of those eligible for a holiday bonus will save or invest the money, 25% will use it to pay down debt, and 20% will use it to pay for holiday spending. Other popular choices include rewarding themselves with a new consumer purchase (9%) or taking a vacation (9%).

Read: National debt to hit $600 billion

Some tips for Canadians looking to pay down debt:

Don’t overspend – Develop a budget that establishes how household expenses will be paid and how spending will be managed.
Curb credit card debt– Pay down credit cards, beginning with those that carry the highest rate, and consider using a low rate card for purchases.
Invest to save – Set up a Tax Free Savings Account (TFSA) or high interest savings account to set aside extra cash in case of an emergency. Also consider using exchange traded funds to reduce management expense fees.
Become mortgage-free faster – Choosing a lower amortization and increasing monthly payments on mortgages can help you pay off your mortgage faster while saving you thousands of dollars in interest costs.
Have a back-up plan – Develop a fallback plan in case you are unable to meet your financial obligations as a result of unexpected circumstances, such as loss of work or damage to personal property, such as your home or vehicle. The general rule of thumb is to have an emergency fund set aside that is equal to three to six months of your income in a high-interest savings account.

Read: Do the holidays make people cheap?