And now for the obvious…Saving money is a practice that all people need to do well. The truth is, however, that not everyone is very successful at doing so. It’s one thing to say that you’d like to put away funds for a rainy day. It’s another thing to actually follow through on that commitment. Canadians have been known to be pretty good savers…until now, apparently.
Last week, QMI Agency’s Stefania Moretti reported that Canadians are lagging behind their American counterparts when it comes to saving money. According to the Financial Planning Standards Council (FPSC), less than 20 per cent of Canadians have a legitimate financial plan set in place.
Economists note that this finding has not occurred since the 1970s. In fact, Moretti points out that, at one point, Canadians were outsaving their neighbours to the south by 10 per cent. She writes that, “Canada’s personal savings rate fell to less than 3% through the first quarter of 2010. South of the border, personal savings rose to 6.4% in June.”
One of the biggest concerns for Canadians is the increase in household debt-to-income ratios. They have risen to an astonishing all-time high average of 145 per cent. Clearly, this is not good news for an economy that is regarded as making one of the strongest rebounds from the global recession of the past year.
Bank of Canada governor Mark Carney explains: “In effect, households are demanding funds from the rest of the economy, rather than providing them, as had been the case through the 1960s, 1970s, 1980s and 1990s. This cannot continue.”
The FPSC has declared this week as Financial Planning Week in an effort to assist Canadians in strengthening their financial plans. They will release a major study shortly to aid in this initiative. They are confident that adequate financial planning is all that is required to ensure proper savings for all of life’s necessities.
In fact, a previous study proves it. Moretti writes that they found that “83% of Canadians who engage in comprehensive financial planning said they feel in control of their finances and 61% said they have peace of mind. Meanwhile, more than half of those who do not engage in any financial planning said they barely get by every month.”
In addition, those who reported to have financial plans felt more comfortable that they could manage economically tough times, emergency situations, care for their families, meeting life goals and retirement. Inevitably, better savings leads to a better life.