Poll finds Canadians are dipping into their savings to pay for vacations, cars

A lot of Canadians are failing at a handful of things: faking it until they make it, keeping up with the Joneses, setting aside money for a rainy day and putting money into some sort of retirement account. Many blame the economic collapse, but is it just reckless financial habits?

Tangerine bank released the results of a new survey (via Yahoo! Finance) that found one-third of Canadians continue to put their hand into their long-term savings cookie jar in order to pay for things like new cars, home renovations, vacations and much more. Fifty-percent of Canadians say they have no savings goal at all.

Surprisingly, one-quarter of Canadians set aside more than $500 per month. However, more than half (56 percent) continue to save less than $25 per week.

Financial experts interviewed for this place the blame on households that refuse to establish a budget for savings objectives, day-to-day expenses and reality. For instance, if a consumer wants to purchase a cup of coffee each day from Tim Hortons or Starbucks then they need to insert into their budget.

Moreover, analysts are perturbed by the fact that Canadians are one or two paychecks away from undergoing a personal financial collapse. In other words, if they lose their job then they could lose their home and live on the street because they don’t have three to six months of savings put away.

“I get very concerned because they don’t even have the basic savings in place such as an emergency fund or something for a rainy day should something happen to them,” said Laurie Campbell, CEO Credit Canada Debt Solutions. “We recommend people have three to six months of their income for basic expenses in an emergency fund (and) make it a point to not include your credit in your savings strategy.”

What’s the solution? Well, the simplest step would be to establish an automatic savings plan (ASP). This allows consumers to pay themselves first by requesting their respective bank to withdraw a certain amount each week or month and transfer these funds into their savings account, even with record-low interest rates.

Despite the common sense behind it and the constant reminders, a household budget is imperative to achieving financial independence and success.

This comes as a new Equifax report suggests that overall consumer debt in Canada reached $1.59 trillion in the final quarter of 2014. The average consumer debt held by Canadians – excluding mortgage debt – is $20,967, up nearly three percent from the third-quarter.