TORONTO, ONT, CANADA, May 14, 2015 (Korea Bizwire) –The financial fitness of Canadians is a hot topic these days. Household debt is through the roof. Nearly 20,000 jobs disappeared across the Canadian economy in April. Housing markets are uncertain. But — household assets are up, and credit card delinquency is down.
So — we’re ok, right?
The key to a financial litmus test might be found in a recent survey by Pollara Strategic Insights on the financial health of the middle class. Key findings included:
- Just 10 per cent of Canadians feel they are financially secure
- 38 per cent say they are getting ahead with some savings
- 44 per cent are just getting by, with no savings
- 8 per cent are falling behind on their monthly expenses
According to Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, an inability to save should be a red flag.
“Your savings account is the canary in your financial coal mine,” says Schwartz. “It’s your safeguard against uncertainty, whether it’s a fluctuation in housing, job security, health, or anything else — a robust savings account will keep you from falling on hard times. If your savings account is in trouble, you are in trouble.”
Schwartz worries that too many Canadians are hoping they can rely employment insurance to protect themselves in the event of unexpected financial challenges. He notes that EI weekly benefits (55 per cent of average weekly earnings to a maximum of $524 per week) may come up short, forcing a reliance on credit and debt.
He offers the following tips to help resuscitate your savings-account canary:
Commit to saving. Don’t make a vague promise to save when your budget allows — make saving a permanent part of your budget. Automate your savings so that a portion of your paycheque goes directly into your savings account, without you realizing.
Make room. If you simply can’t contribute to your savings account because of an overloaded budget, it’s time to reassess your spending. Think very carefully about “wants” and “needs” and cut out non-essentials like big cable packages or eating out.
Extra income. Once you’ve slashed your spending as much as possible, think about ways that you can boost the other side of the ledger by earning extra money on the side. If you have a skill, there’s a chance you can do some freelancing work. Every little bit counts.
Track your spending. Your budget is useless if you don’t stick to it. Keep an eye on bank and credit statements and download a free budgeting app to track your spending and make sure you are following your road map.
Eliminate debt. Hefty credit card bills are punishing you each month with high interest rates. With the extra room that you’ve carved out of your budget, use a small amount of it to add to your monthly payments. A credit card debt calculator will show you how even small additional payments will save you time and money. Once you’ve dispatched your debt, you can roll those payments into your savings account and really build some momentum.
“Is your back-up plan actually viable?” asks Schwartz. “If you can’t survive on a portion of your wage, you need to either start saving more or start living well within your means.”
About Consolidated Credit Counseling Services of Canada, Inc.:
Consolidated Credit Counseling Services of Canada is a national non-profit credit counselling organization that teaches consumers about personal finance.
Source: Consolidated Credit Counseling Services of Canada, Inc. (via Marketwired)