Canadians Not Saving Enough Money

We, here at Synergy, often discuss the importance of working towards making more money. But what good is making money if it will inevitably be lost? Naturally, saving money is the key to building your finances. As one of our favourite business reporters, Madhavi Acharya-Tom Yew writes in yesterday’s edition of The Toronto Star, most Canadians (94% to be exact) say that they feel better when they have money put away.

The odd thing is, however, that a significant number of Canadians (one fifth, actually) haven’t put any money aside as a future safety net. This information was revealed through a Scotiabank survey that was published yesterday, according to Acharya-Tom Yew. It is a curious thing to know that so many people aren’t saving their money even when they acknowledge that doing so is necessary.

As Acharya-Tom Yew writes, finance experts agree that everyone should set aside an emergency fund. They surmise that adequate savings eqate to approximately three month’s worth of household expenses. Especially in the wake of the recent recession, job stability has decreased, giving Canadians all the more reason to put more money away for a rainy day.

Scotiabank’s survey discovered that only a quarter of respondents have set aside the recommended amount. A third of those who were surveyed, in fact, indicated that they have more than three month’s worth of expenses put aside, while 23 per cent have less than one month of expenses readily available to them.

Acharya-Tom Yew also indicates that “sixty-eight per cent of Canadians say they have a plan in place to achieve their savings goals. But nearly one-quarter, 23 per cent, say they like to live day-to-day and do not worry about saving money.”

According to Chris Hodgson, Scotiabank’s head of Canadian banking: “We’re really become a consumer society and we are encouraged to spend. Having the discipline to put aside part of your income for the future or saving for discretionary needs are not things we are necessarily guided to do. There’s an opportunity to raise a level of awareness on how Canadians can build more of a nest egg. To us, this is an issue for Canada.”

Broadcaster Valerie Pringle has been recruited by Scotiabank to travel across the country to speak to Canadians about the challenges of putting money aside. Says Pringle: “It’s like we’ve been living in a fool’s paradise of cheap money and buy, buy, buy, and our grandparents concept of saving to buy a refrigerator sounds like something from the dark ages.”

The Scotiabank survey was conducted online in late March. It also discovered that 72 per cent of Canadians believe that saving an extra $1,500 would improve their financial status. 83 per cent feel like they will change their spending habits to save more money. Finally, 20 per cent would make large changes while 63 per cent would make small ones.