Throughout the month of November, SPN will be run a Financial Literacy column sponsored by Mason Financial, beginning November 5th. In the first week, we’ll look at starting with a budget. Week two looks at living within your means. The third week is about knowing your rights and responsibilities. And the last week, we’ll look at having a savings plan.
To get us started, it’s all about the stats; they show Canadians are in some trouble.
Many Canadians are living outside of their means and incurring unwanted debt.
Canadians aged 35 to 44 years struggle the most to make ends meet.
- 42% of 35-44 year olds either struggle to or are not keeping up with bills and financial obligations.(1)
Mortgages, credit cards and lines of credit are the most common types of debt.
- 60% of debt is held by those under 45 years of age.(1)
Too few Canadians have a budget.
- Less than half (46%) of Canadians have a budget, yet the vast majority (93%) of those who do budget stay within it most of the time.(1)
Canadians would not have sufficient short-term savings to face economic surprises, such as job loss or illness
- 52% believed that their household could not cover at least six months’ worth of living expenses if they lost their main source of income without eventually borrowing money or moving.(2)
Many Canadians are unprepared for unexpected expenses.
- 57% said they would use savings to pay for an unexpected expense of $500. And only 31% would use savings to pay for an unexpected expense of $5,000.(4)
Many are very close to needing a loan to cover necessary expenses and the demand for payday loans is growing.
- In a 2016 survey of payday loan users, 89% of respondents used payday loans for necessary expenses, such as car repairs and bills.(2)
Canadians are saving for their children’s education.
- 71% of Canadians with children under the age of 18 are saving for post-secondary education. And 72% say they used Registered Education Savings Plans (RESP) in 2014.(1)
But Canadians aren’t doing enough to secure their retirement.
- Only 66% are preparing themselves financially for retirement.(1)
More seniors (65+) are retiring with debt.
- In 2014, about 19% of retirees had a mortgage on their primary residence, compared to 16% in 2009. And about 15% of retirees had outstanding credit card balances, compared to 12% in 2009.1
Canadians are not sufficiently aware of their financial rights and responsibilities.
- 51% incorrectly believe that you won’t pay interest on a cash advance as long as you pay your credit card balance in full by the due date indicated on your statement.
- Only 35% knew that when renegotiating a mortgage you could have to pay a penalty greater than three months interest.
- Only 29% knew that a bank cannot refuse to open an account for you only because you have filed for bankruptcy, or don’t have any money or a job.
- Only 8% correctly said that to obtain a credit report there are no costs by mail, but some costs by internet.(5)
Managing Money and Debt Wisely: It Pays to Know!
Find helpful tools and resources at Canada.ca/Financial-Literacy-Month.
- 2014 Canadian Financial Capability Survey.
- Financial Consumer Agency of Canada’s national survey of 1500 payday loan borrowers – 2016.
- Financial Consumer Agency of Canada’s analysis of a 2015 survey conducted by the Organisation for Economic Co-operation and Development’s (OECD) International Network on Financial Education.
- Financial Consumer Agency of Canada’s calculations of the 2014 Canadian Financial Capability Survey data, available through Statistics Canada.
- Financial Consumer Agency of Canada: POR Financial Consumers’ Rights and Responsibilities – 2016.
- Four in ten millennials own their own home: HSBC study
- Financial Literacy: Have a savings plan
- Financial Literacy: Know your rights
- Financial Literacy: Live within your means
- Financial Literacy: Start with a budget
- November is Financial Literacy Month
- It’s that time of year: RRSPs versus TFSAs
- For information, assistance, and personal consultation, please contact the sponsor Karen Mason of Mason Financial.