Although the majority of Canadians say they “need to save more money,” almost two-thirds admit that they don’t make saving a priority, according to a recent poll conducted on behalf of Toronto-based Canadian Imperial Bank of Commerce (CIBC).
Despite the fact that 85% of Canadians surveyed aren’t saving enough, 82% admitted saving would be possible if they “cut back” in other areas each month. In fact, Canadians could save, on average, $360 a month before “feeling the pinch,” the report says.
Better saving habits are critical to ensuring that many Canadians can retire and withstand personal emergencies. For example, 79% of Canadians aged 35 to 54 are concerned they won’t have enough money to retire at an age of their choosing while 53% said they would use credit or borrow from friends and family if confronted with an unexpected $1,000 expense.
“With consumer spending still strong and fuelled by a long period of record low interest rates, the study shows that very few Canadians are making savings a priority, which is concerning as we head into the holiday spending season,” says David Nicholson, vice president of imperial service at CIBC.
“This is the time of year when many of us make room in our budget for spending on gifts, Black Friday and Cyber Monday sales and holiday parties, but don’t think twice about how little we’ve saved until regret kicks in with our New Year’s resolutions,” he adds.
Aside from an annual income, 62% of Canadians say they receive, on average, $2,280 a year in “extra money” and as much as $13,100 a year via cash gifts, employer bonuses and tax refunds. However, 44% of Canadians will put that extra money into savings.
In contrast, two-thirds (66%) of Canadians earning that extra cash are using it to buy themselves gifts, pay everyday expenses or pay down consumer debt. Only 41% of Canadians put the extra money in emergency savings or contribute toward their retirement savings.
Canadians say they’re not saving enough because they don’t make enough money (46%), they get off track with unexpected expenses (29%) and they’re struggling to pay everyday expenses (24%).
The report indicates that saving would be easier if Canadians had a set amount of money automatically deducted from their paycheque and put into a dedicated savings account. Specifically, 55% of Canadians say they’re more likely to save if automatic deductions were put in place.
“Paying yourself first is an easy and effective savings strategy,” Nicholson says. “For most people, it’s actually easier to start with a savings goal first, set an automatic savings plan to meet that goal, and then, simply spend what’s leftover.”
Many Canadians would also benefit from a financial plan that will help them determine an ideal amount of money to save based on short-term and long-term goals, the report says.
The survey was conducted on Oct. 20 and 21 among 1,523 randomly selected Canadian adults who are Angus Reid Forum panelists.
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