More than half of Canadians under 50 spend their disposable incomes without thinking about their financial futures, suggests a study released Thursday.

The Burn Rater Test

Have you gone shopping and/or bought things to make yourself feel better? Have you spent money in your account near the end of a pay period, because you knew you were about to get paid again? Have you hidden purchases from family or friends, or told someone you paid less for something than you actually did? Have you bought things you wanted, without considering the longer-term impact of the cost on your personal finances? Have you entertained family or friends at home or at a restaurant more than you could afford? Have you used your credit card to buy something when you didn't have enough money in your bank account to pay for it? Have you avoided looking at your bank account or balance because you were concerned about how much money you've spent? Have you regularly bought things on the spur of the moment? Have you gone shopping (not including grocery shopping) two or more times a week? Have you focused on spending today ahead of creating a budget or financial plan for the future?

The Burn Rater spending test, commissioned by Mackenzie Investments, found 24 per cent of respondents under age 50 are overspenders and 32 per cent show overspending tendencies.

The term burn rate refers to how quickly disposable income is spent. Questions included: "Have you gone shopping and/or bought things to make yourself feel better?" and "Have you spent money in your account near the end of a pay period, because you knew you were about to get paid again?"

Dr. Sunghwan Yi, a professor of marketing and consumer studies at the University of Guelph who helped develop the test, said people who overspend have a hard time making ends meet and trouble saving for the future.

Researchers asked 1,169 adult Canadians to complete an online survey of 10 questions on their spending habits that could be answered yes or no.

The polling was conducted by Decima Research in December.

A respondent who answered yes to up to three of the questions was considered a controlled spender, while anyone who answered yes to four to six of the questions showed overspending tendencies. Anyone answering yes to seven or more questions was categorized as an overspender.

The study found Canadians are busy shoppers, with 45 per cent hitting the stores, not including for groceries, twice or more weekly.

More than half of Canadians admitted to being impulse buyers, while 37 per cent of respondents under 50 and 22 per cent of those over 50 said they have hidden purchases or told someone they paid less for an item than they actually did.

Many Canadians said they rely on retail therapy for a pick-me-up, with 60 per cent of those under 50 and 47 per cent over 50 making purchases to make themselves feel better. 

And when they're spending, almost half of Canadians use their credit cards to buy something when they don't have enough money in their bank accounts to pay for it.

Young, middle-aged not planning for future

Thirty-seven per cent of Canadians said they are not planning financially for the future. Forty per cent under 50, and 21 per cent over 50, said they focus on spending today rather than making a budget.

Sunghwan said he was surprised by the findings, especially "the great divide between under 50 versus over 50 people."

On average, Canadians under 50 answered yes to 4.35 of the test questions, compared to 2.88 for those 50 and above. Only five per cent of respondents over 50 were considered overspenders.

The findings suggest younger and middle-aged people "tend to basically spend money without thinking about their financial future," Sunghwan told CBCNews.ca, adding they "don't seem to appreciate the fact that the retirement age is quickly approaching and this realization often comes as they reach the age of 50, but it's way too late.

"We need to really encourage younger Canadians to start saving money and to develop a healthy habit of saving and investing as early as possible."

Curb your spending

Sunghwan said the study showed a concerning pattern of young and middle-aged people focused "on now rather than the future."

He said the most important changes people can make to improve their spending habits and start saving for the future are creating budgets and using cash instead of credit, because "people tend to feel greater pain when they hand over cash than when they are using a credit card."

He also recommended that Canadians arrange for a set amount of pay be automatically transferred to their savings and investing accounts.

"This way you save first and use the remaining money as necessary, instead of the other way around," he said.

And for the impulse shoppers, he said, "Try to walk away for at least 24 hours if you're about to buy something on impulse… during this 24 hours, you are likely to realize that the things you are about to purchase on impulse are not really that important."

The study also found:

• The younger the respondent, the worse their reported spending habits. Nearly 30 per cent of overspenders were 18 to 34.
• Women are more likely than men to seek solace in the malls: 64 per cent to 43 per cent.
• Canadians are entertaining mostly within our means, with 77 per cent saying they have not entertained family or friends at home or at a restaurant more than they could afford. 
• Forty per cent of the under-50 crowd spend money near the end of a pay period because they know they're about to get paid again, while only 30 per cent of those 50 and over do.
• Forty-two per cent of Atlantic Canadians spend money near the end of a pay period. 
• Nearly a quarter of those under 50 avoid looking at their bank accounts because they're concerned about how much money they've spent. Only eight per cent of respondents over 50 avoid looking at their financial statements.
• Atlantic Canadians (60 per cent) are most likely to make spur-of-the-moment purchases and Quebecers (43 per cent) are the least likely.
• Women are nearly twice as likely as men to be overspenders: 20 per cent versus 12 per cent.
• Single people are almost twice as likely to be overspenders as married people, 22 per cent compared to 14 per cent.