As 2019 begins, money matters may be on a lot of people’s minds. Property taxes are due, income taxes need to be filed and credit card debt may still be lingering from December.
However, don’t get too stressed. According to the Financial Consumer Agency of Canada, Canadians are fairly savvy when it comes to money. We just need to develop some good habits to get us out of a financial rut.
“The most important thing is for people to start by budgeting and then ensure they’re even saving small amounts of money regularly,” said Steven Trites, manager of Research and Policy with the Financial Consumer Agency of Canada.
The agency recently completed a survey and long-term study that confirmed saving, even small amounts of money, leads to a greater sense of financial well-being by having money for unexpected expenses.
54 per cent of Canadians who began budgeting during the 2016 pilot project were still at it a year-and-a-half later and 70 per cent of those said they were able to keep up with their financial commitments.
Still more than half of Canadians in the survey are not saving, which is a problem.
“Definitely Canadians are overleveraged,” pointed out Tea Nicola of Vancouver’s Wealthbar.
Right now Canadians' debt-to-income ratio is running about 170 per cent. That means we owe $1.70 for every dollar of disposable income - disposable income is the money you have after taxes. In Vancouver the ratio is much higher – 242 per cent.
“A note on that: I’m actually leaving Vancouver because I just can’t afford it anymore,” said one young woman we talked to on the street.
Nicola says you need to analyze all your spending, seek help and advice, if you need it, and start eliminating unnecessary expenses. It takes discipline.
“I’m a big fan of, if you can do anything for 30 days, you can do it for a lot longer than 30 days,” she said.
“It’s more about the regular efforts to save than exact amounts,” Trites added.
The key to budgeting and saving is just getting started. In the pilot study, once non-budgeters got going, their budgeting behaviours increased by 14 per cent.
In terms of financial well-being Canadians ranked second out of the five participating countries. Norway was number one, followed by Canada and Ireland. Australia and New Zealand tied in last place.