Do you know that Scotiabank slogan that tells customers “you’re richer than you think?” Well, perhaps the results of a new finance study show Canadian households are actually poorer (or not as rich) than they think.
A new study by the Certified General Accountants Association of Canada (CGA-Canada) released the findings of its latest poll that discovered close to one-third of Canadian households admitted to never or almost never having any money left at the end of the month when they pay all of their bills.
The report highlighted a number of important findings: 29 percent of households reported not having any wealth, 30 percent say wealth accumulation is very important, 45 percent of households are satisfied with the wealth they have and 51 percent could not recall or never calculate their household wealth.
Consumption may be a significant hindrance to accumulating wealth and savings. The survey noted that 80 percent of households conceded they may consume a part of their wealth, while when funds are available Canadians are more than likely to spend it than save it.
“Many Canadians are missing a golden opportunity to build some financial security for themselves during this time of low-cost borrowing,” said Rock Lefebvre, vice president of Research and Standards at CGA-Canada and co-author of the report, in a press release. “What people may not fully appreciate is just because you can take up to 25 years to pay off your home, doesn’t mean you should or need to. In some ways, it’s similar to making only minimum payments on your credit card.”
The findings are not really surprising. Statistics Canada reported last month that the average household spends more than it earns. According to the statistics agency’s calculations, the average Canadian household owes 165 percent more than it earns in annual disposable income. This is an issue that exiting Bank of Canada head Mark Carney and Finance Minister Jim Flaherty have been warning Canadians about for quite some time.
What are Canadian consumers spending their money on? A Bank of Montreal (BMO) survey from late last year revealed that Canadians spend $3,720 each year on impulse buys – most are doing it to cheer themselves up, but a majority of them regretted the decision in the end.
Canada’s personal savings rate was less than three percent last year. Meanwhile, the average consumer debt load is more than $27,000, an increase of six percent in 2012 and the fastest pace since the height of the economic collapse in 2009.
Similar findings are seen in the United States. A lot of studies depict high debt loads, a paucity of personal savings, terrible consumer habits and no respite in sight. Whether or not incomes are rising for the average middle-class individual or household, one thing that humans are capable of doing is to adapt to the situation.
For more information about saving habits, read this Economic Collapse News article titled “25 ways to increase your savings to prepare should the economy totally collapse.”
The Canadian online Ipsos-Reid study was conducted with 1,805 adults between Sept. 14 and Sept. 21, 2012. It contains a margin of error of +/- 2.3 percentage points.