Canadians struggling to save money: RBC

Richard Goyder, vice president of RBC Personal Lending, says it is good Canadians are reducing personal debt, as they are preparing their families for a possible economic downturn. He says it is concerning, though, that more than half do not have savings.

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John Size, CTVNews.ca

Date: Thu. Feb. 9 2012 12:32 PM ET

More than half of Canadians don't have savings set aside for emergencies, but they are paying down more personal debt, an RBC survey found.

The RBC Consumer Outlook Index released Thursday also found 46 per cent of Canadians believe their personal finances are standing still.

"We are concerned that 57 per cent of Canadians said that they don't actually have any savings set aside for that rainy day," RBC vice-president of personal lending Richard Goyder told CTV's Canada AM Thursday.

"As individuals there's not much we can do about the economy as a whole, but we can prepare ourselves, our family, for when things turn down in the economy," he said.

As well, only 32 per cent of Canadians surveyed in January were positive about the country's economy, down from 43 per cent at this time last year and 56 per cent in 2010.

But the news isn't all glum as the survey also found Canadians in the last quarter were starting to heed advice to pay down their non-mortgage debt. It found the average person reduced that debt by about 10 per cent.

Goyder believes people are listening to the dire warnings about personal debt in the media and are starting to worry as the global economy continues to struggle.

As for the lack of savings, Goyder said individuals can become too concerned with debt and forget, or are unable, to put enough money away to protect themselves from an economic downturn.

"It's very good to have a plan because a plan will help you understand how much is coming in, how much is going out and maybe make sure you balance that, saving a little bit for a rainy day as well as keeping your personal debt under control," he said.

On the upside, about 21 per cent of Canadians believe they are making progress financially and paying down debt is a positive indicator, he said.

"At least people feel that their situation is stable," Goyder said. "We also didn't see much change in the level of employment anxiety across the country, which is also good."

The quarterly online survey of 4,479 Canadians was conducted in early January.

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Joe
said

Would the government just do the surveys n watch the results? All the money collected as taxes - where do they go? Why does the provincial tax change for every province? What is done out of excess money at the federal level. After paying taxes on the whole, taxes are paid on every purchase of goods also, now how could you expect people to save money for the rainy days?
Atleast taxes for basic needs should be eliminated. And emergency needs should be made available to everyone regardless of social status.

ChetMC
said

People need to adjust their expectations. A generation ago the average house in Canada was 1100 square feet. In the 1940s it was 800 square feet. Today the average over 2000 square feet. Twenty or thirty years ago families had one car, today they have two or three. When I was growing up nobody went on cruises or to Mexico for a vacation. Cable TV with 13 channels was a luxury. People are stretched so thin because their expectations are too high.

Terry
said

This article was made by RBC indirectly, RBC wants you to save like any other bank so they can charge you fees for things you didnt know and gain high interest on your money.

Your money should be going towards:
paying down credit debt
paying down student loans
paying car off
paying house off
then save about 20 k
rest you can spend on yourself

- health and economics management student

geo
said

Life in Canada is very good. Our taxes give us a great healthcare system and our nation is ranked one of the best in the world to live in. If you want to compare life where taxes are lower, look at the healthcare in the US and how many millions don't dare go to a doctor because they can't afford to pay or afford to have insurance.To be frank, people today are so greedy, so materialistic, so whatever financial mess they find themselves in, they deserve it!For too many years I've seen some of the huge housing developments people buy into as well as the extravagant vehicles they buy and the luxury items such as big screen TVs. None of these are necessities, they are ego massagers. Sickening.

Don Juan
said

What a joke, I tried saving, I lost 34,ooo dollarsand I'll never see it. I am taking my retirementsavings, 100,000 k left, and investing what's left,after I pay my tax, in the Black Market. I can't counton the banks, or the government, so I may as welltrust some other crooks

Doug
said

Just reduce the price of homes and the best way to do so is to stop buying. Short term pain for long term gain. I have no idea how young people can afford to get a start in life when the average house price in major cities like Toronto is at the half a million dollar mark.Reduced prices means a lot of people will have to sell their Mercedes or take fewer vacations in the Cayman Islands inclusive of lawyers, some real estate agents, a lot of dime a dozen home flippers, movers and especially bankers.Thats a good thing!

Deke
said

Step 2 Check out Rich Dads Poor Dad's book, find info on his cash flow quadrant. It sets it straight on what you need to do

Anne
said

Well said "middle class poor" - that is it in a nutshell.

Deborah Ann
said

With everything going up and raising taxes for this and that and salary stays the same it is really hard to save. Once you pay out all your bills each month and try to put a little away for retirement there is nothing left. And makes me mad knowing that my tax money has been mismanaged by our Quebec Government. We should all try to get a seat in the governement so we can enjoy their wonderful benefits.

Sal - seriously and sadly
said

Of course Canadians are having trouble saving for the future - we lost so much in the last two market disasters, that we just feel hopeless! We are already in our 60's. We don't have time to "recover". My son has learned to diversify very early in his life and he should be fine. I think that it is a CRIME that the gov't is still allowed to take money out of paycheques for retirement and then mismanages it. Almost half a paycheque goes to CPP, and other deductions - if we had that money now, we could live and eat and pay our bills, AND put more money aside for OUR future.I think that it is a CRIME to hire - and I use the work lightly, as hire usually means that someone is working for a paycheque - "hire" a lot of extras in parliment (something that Harper was opposed to until he got "the power") and we have to pay THEIR CPP.I was always a supporter of Harper until I saw our retirement dwindle away and more "higher ups" hired to eat away at my money.I am one disallusioned Canadian that will be changing my vote next election. :-(

Hunky Dory
said

I thought Premier McTwinkie was saving my money for me. He has taken most of it!!!

Ukie
said

These bankers are a real laugh. They take everything that you earn and then some and then they expect people to save for a rainy day. Drop dead!

Middle Class Poor
said

I am a single middle class working mom, with three teenagers; we own our house (on top of that water, hydro, property taxes, and insurance). My mortgage is over one pay cheque; and, we live in a 25 yr old house - which needs a lot of work. We do not have cell phones, cable, play station, don't go out for dinners or movies, holidays, concerts, etc. My neighbour on welfare gets free passes to the recreation centre, half price off programs at the recreation centre, and we don't qualify because I am the working middle class poor. This Christmas we had pasta; our welfare neighbours had two turkeys and all the fixings including gifts. Save? You kidding? I am supporting two families, mine and the neighbours in all the taxes I pay - at least they get to spend Christmas in a cabin on the beach - did I forget to mention that?

welder in edmonton
said

Stop trying to think of a way to save a nickel and start thinking of ways to make a buck

paleo
said

Cannot save? Because we have to survive and pay taxes. Here in NS, the provincial campaigned on no new taxes, then increased the HSTby 2 points to 15%. We have multi layer taxes on everything and the NDP government campaigned against that - til they got into power. We have the second highest income tax in the country and bracket creep as well so you always get dinged. Canadians are not living beyond their means, we are dealing with current and past government financial misdeeds. Party governments are legal organized crime - it is time they were done away with. Give us recall and lets throw these bums in jail.

anwar
said

The main reason for debt... is Taxes .. or the mismanagement of of it, whether it be prisons or Mp pensions...The big party for the Queen, private jaunts on Government aircraft or whatever the Government chooses to use our hard earned money on.*Tax Freedom Day* comes in June this year (I believe) that means EVERY PENNY you have earned till June, has gone to government who STILL has debt..(which We have to pay)The only disposable money you have left is after June .Taxes are meant to cover Necessities like roads, hospitals etc.Canadians and our government will both prosper after disposable income improves Tax Freedom Day should be April and the Goverment should manage its Budget responsibly.

Merv
said

Our family's hobbies now include trying to keep a fridge stocked with food.

S in Vancouver
said

Some free advice: a financial planner can help a lot, but always remember that they are like a mechanic - they are experts in their field and are also selling you products and services. Listen to what they have to say, but don't sign on any dotted lines until you've taken the paperwork home and done additional research online.

Terry
said

I had a Scotiabank Visa which was closed because I went over the limit. I asked if they would stop charging me interest so that I could at least pay off the principal. That was 10 years ago and they said that if they do that it would reflect negatively on my Credit Report. I have been paying my minimum payments until recently I received a letter stating that they are raising the interest rate (because of late payments, not over 30 days). And they will lower it back to whatever I was paing before if I make all my payments on time for 6 months straight.This is after paying the minimum for over 10 years (approx. 10,000. in interest) and still owing the full (4,000.) yet not making a dent in the principal. Therefore, I stopped making payments and I will wait for them to take me to court. At least this way they will settle for a lesser amount, Because I am on a fixed disability income and can't afford to pay any more money.

Deke
said

Hi AllHere's what I did. Made a budget. cut out all non-essentials. write every creditor, credit card, power, water etc a letter explaining your situation, keep it short and simple. Say you make this much money, and you are paying this much on your debt. .... Give everyone $10 - $20 a month for your payment, they can't cut you off for non-payment. Pay the rest of your budget on the smallest bill, not the one with the highest interest, do that until your smallest bill GOES AWAY then pay the next smallest. etc etc etc, I paid $8000 in 8 months now I'm debt free except a mortgage and a vehicle, with $50000 in high interest and tax free accounts, at the time I was paying debt I was making $8/hr

Rational Westerner
said

I don't want to belittle those who are hurting, but when your income drops you have to make some tough decisions. My wife and I have gone without cablevision, cut back to one car, brown bagged it and never went out so that we could get out of debt and on with our lives. The worst thing you can do is stick your head in the sand and grow your personal debt.

Mark in Newmarket
said

Of coure the average Canadian is having trouble saving money, there are lots of factors as to why they aren't. Access to easy credit, buy now and pay later has been made far too easy for everybody. Just look at our highways and see the cars many people are driving. Can they really afford all those status symbols? The good paying jobs are disappearing, over the course of the last 15yrs companies have been shutting the doors here and are moving to Mexico, China, Brazil, the US, where ever the cheap labour is available. Provinces like Ontario are really feeling this affect, under comerade McGuinty he has done a poor job with the economy. We are going to have to learn how to live with less, but most importantly we are going to have to make choices as to what we will buy. Decisions like "do we need or do we want"? Maybe driving a 2nd hand chevy is better than driving around in a new BMW with a 5yr lease, who care's what others think you drive, they aren't the one's who paying your bills, or trying to feed and cloth your children and maybe 5000 sq ft homes should be downsized to one's that are more affordable.

Mel
said

I have no where else to cut - I have cut up all the credit cards. I cancelled the cable, and the medical coverage (now THAT is scary with two kids) we eat out once every two months - never go to movies - drive used vehicles and do not smoke. My money goes to food, utilities, mortgage, exorbitant bank fees I have tried to negotiate down to no avail, and still we get nailed at tax time because we are at that cusp where we are just barely considered middle income so we get taxed at a higher rate. We are the ones struggling the most - who need the tax help but the programs designed to help us really do not. Kids fitness - sure it helps but some months we don't have the extra cash to get the kids into the sports. The Eco energy grants to help us lower the utility bills would be terrific - but you have to have the money to put out in the first place to take advantage of the rebates. Yes, I know my home needs new windows and that would cut down on my utilities bills and help me save money - but my bank will not lend me money to change my windows even with the Eco grants I have qualified for, so it is of no help. You cannot save money even with the best of intentions if everyone is working against you - especially your own government.

senior taxpayer
said

Come on I'm sure Harper, Flaherty, Clement, Baird are not having problems saving money... and they have their nice fat pensions to look forward to.. they don't have to worry about OAS so they don't care...

Shelly Thompson
said

"Big Banks say..." lost me right there. Gouging crooks. Consolidate your debt and fight back.

Truth Only
said

There some unreal comments here on this talk back. I didn't know people living pay check to pay check, spending only on food, water and electricity is "spending beyond their means" or "keeping up with the jonses". We are living in an econommy that is plundered by the greedy that have pushed up the price on the basic things that we need. MOST people I know are NOT going to a restaurant EVERY DAY and people are correct when they talk about excessive bank fees. Why is it that tax have increased and we are now getting far less services? Oh yes those jets n jails. It seems only the minority 1% keep coming on here and lecturing us about what to do after said 1% inherited the money from their own parents. The banks and government need to get real and stop being greedy!

ironmanhard
said

Hey hey! Gold and silver are going up in the stock market, buy that, and your money increases every day! better than a savings account!

Tor
said

Personally I believe everyone should be taking their ENTIRE savings and paying off their debt as much as they can. In case of emergency, the credit that they have paid off is available to them. During that time they aren't paying the service on that debt, essentially pocketing that money.There always seems to be this discussion about having savings set aside, but what is the point of having savings earning you .25% and floating debt that you are paying 10% on.

dave
said

@ bikerborz
What is your address ? HAHA !!! LOL. I am just kidding. Actually I know quite a few people that do the same as you. They have no bank accounts and keep all their money hidden at home or at an alternate location. Everything they do they pay cash. You know what, they pay no bank fees, have no credit cards so they pay no interest and guess what. they are pretty well off.

Robert B
said

Paying down the bills OK but like someone said put your cash in a SD box. Savings accounts are totally useless.

Brad C.
said

Boo hoo. The banks are taking all my money in interest and charges. Maybe you should skip that Cuba vacation or buy a used car instead of new. It's amazing how many claim to be broke but yet still have money for smokes or eating out. I'm so tired of hearing people make excuses instead of taking responsibility for their personal finances. Take 10% of every cheque and put in a savings account. Done. Are you really going to miss that money? Then when it's time for you to retire I won't have to hear you complain again that the government doesn't give you enough money to live on. Smarted up Canada!

Save your cash, buy gold!
said

I'm saving money, its called a safe in my own house. And when I have enough cash, I look for deals on raw gold or jewelry to smelt. Banks are never getting one more cent out of me. All it takes is a little self discipline. Cut out the middle man. The couple dozen ounces or so I have managed to scrap together in the last 10 years has already doubled in value. I'm now starting in on silver. You know, back to the time when those things defined your raw wealth. Not fictional numbers on a piece of paper.

Joel
said

Good ole' doom and gloom Canadian Media. Great way to start everyone's day!

Aras
said

Well is there any wonder? I've spent years trying to bring our personal debts down, but can't even make a dent in it. Even trying to get a consolidation loan doesn't help - I barely have enough every month to cover my minimums, never mind what the banks want for a consolidation loan. And there are no programs for those who recognize they're heading into trouble. You pretty much have to be right up poop creek in order to get any actual help. Well, I'm on my way - bring on the paddle and the nose plug! And don't say I didn't try to get out before I got there.

mike
said

the solution, reduce the average personal tax burden, thereby increasing disposable income. After you factor in inflation of 2% targeted a year (even though after tax salaries don't grow by 2% a year), with time its been a losing battle.If you cut income taxes, sales taxes, people have more money at the end, and they can invest/pay down debt. Right now we are just paying the government's spending and debt.

Pip
said

A budget is easy to construct but difficult to adhere to. The hardest part is avoiding those impulse purchases of items that are so tempting at the end of the supermarket aisles, or those sale items in the department store. As important as a budget is, a list of Needs and Wants, with priority given to the former and the latter kept for very special occasions is equally important. Do you really NEED that new iPhone, or can you live with the old one - maybe three years old, for another year? Do you NEED that single-serving coffee maker (check out the cost per serving) or can you make do with that eight-year-old coffee drip machine? It all comes down to personal planning. If you want everything new NOW, don't expect to save much, if anything, unless your salary is in the high six figures. Those working two or more low-paying jobs have a much harder time of it, but know the difference between Needs and Wants. People complain about the banks "nickel and diming" us with all their fees. Try putting your nickels and dimes in a jar every day for a year and see how much you end up with. That means carrying cash and not using plastic - thus avoiding those nickel and dime bank fees, and allowing that balance to be reduced and the interest fees too. There's no secret to all this except planning, and sticking to the plan.

ray
said

Why is the government putting all our taxpayers money into prison and airplane. They know that that are forcing a depression that will put a lot of people out of work. You cannot lower taxes and still have great services. People cannot save money because it better going into the next depression debt free than with more saving

Jt
said

MarkI don't think its fair just to blame the Harper gov no matter who is in power people have trouble.

Frederick
said

That's funny... I have 2 mutual funds, 1 TFSA, 1 life insurance/retirement plan, 1 high interest savings account with ally... and I recently opened up an attached savings account on my TD bank.All this and I make less than 20k a year...Oh and I'm single and I live and work in Toronto, the "most expensive city in Canada".

Mike in ON
said

@ Paul - I have to disagree with you on the line of credit for emergencies. Maintaining an easily-accessible fund for emergencies isn't about earning interest; it's about avoiding interest charges when that emergency happens. Having a line of credit also counts against you regarding your credit rating, because even if there's no balance on it, you still have the 'ability' to acquire that much debt. Keep your emergency fund in a no-fee bank account, then focus on getting rid of consumer debt. Do your best to pay cash for everything, and don't worry about 'keeping up with the Joneses' - the Joneses are broke!

Mark O
said

The average Canadian only makes 3500 per month, these days that is pretty much living pay cheque to pay cheque, there's no room for savings. The people paying off debt are probably going without something they need. Wages are falling everything else is going up. The same thing happens every time we have a conservative government.

Joe from Toronto
said

The problem with many people is that they are living beyond their means. They are buying stuff they don't need, with the money they don't have, to impress people they don't care about.

bikerborz
said

Yes, I'm paying down debts, but the bank(s) don't see any "savings" because THEY aren't taking care of it... it's in an envelope under my matress!

NRM
said

What definies "savings"? What was the criteria for how much money Canadians need to set aside to be considered as having an emergency savings?

Mark - Alberta
said

The fact that banks are nickel and dime-ing us to death with service charges doesn't help either.

Paul Ridge
said

It's a better strategy to pay down debt such as your mortgage than have money sitting in a low interest earning account. If you don't already have one, apply for a line of credit then you can use that for emergencies.

canadianbudgetbinder
said

There's no doubt that Canadians may feel their savings are at a stand still or don't have any at all. Every time we turn around something is going up in price and cost of living increases only add a small dent. As a Canadian who started Budgeting in Jan 2011 we were able to see where all our money was going and how to grow the emergency fund. We were shocked as most people would be when designing a budget but the most important part is sticking to it. Know your finances inside and out and spend less than you make even if you only save $5 a month in savings. Anything is better than $0.We need to start thinking about the future as Canadians while living in the present.

S.G.
said

This is rich!One of the reasons Canadians often find it difficult to save is due to high & numerous bank charges, fees, and loan interest rates.

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