The vast majority (85%) of Canadians agree they need to save more money, but 64% are not making it a priority, finds a CIBC poll. And, while most admit they could get by with less, few do, and many say extra money is for enjoyment.
“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,” said David Nicholson, vice-president of CIBC Imperial Service, in a release.
Here are some additional findings:
- 64% say they lack a detailed or regular savings plan, including 26% who “don’t really save” or “never save.”
- 82% admit they could cut back each month by $360 on average.
- In addition to their regular income, 62% say they receive, on average, $2,280 in extra money each year.
- 79% of those aged 35-54 worry about not having enough money to retire.
- 53% say they’d use credit or borrow from friends and family if faced with unexpected expenses.
- Top hurdles to saving are: not earning enough income (46%), getting derailed by unexpected expenses (29%), and struggling to pay everyday expenses (24%).
No more excuses
Almost two-thirds say they receive extra money each year—roughly $2,300 on average and as much as $13,100—in the form of cash gifts, employer bonuses and tax refunds. But just 44% will save the surplus funds, and two in five say the “extra money is for pleasure or enjoyment.”
Among those who receive extra cash throughout the year, 66% use it to buy themselves gifts, pay everyday expenses, or to chip away at consumer debt. Only 41% will put those extra funds aside for an emergency, or to boost retirement savings.
With interest rates expected to edge higher and people living longer in retirement, Canadians need to do more than simply spend less, says Nicholson. “The real question is, how can you afford not to save? Every day that you delay starting a savings plan, the harder and more expensive it gets to meet your goals later on in life.”
Give to yourself first
The poll shows that simple saving habits work best, with 55% agreeing they’d be more likely to save if a set sum went automatically off their pay and directly into a dedicated savings account.
Having a budget and financial plan helps determine the right savings amount based on short- and long-term goals, and monthly cash flow. By setting up the withdrawal on payday, the temptation to spend those dollars is removed, rather than having to overcome it, says Nicholson.
About the survey: From Oct. 20 to Oct. 21, 2017, an online survey was conducted among 1,523 randomly selected Canadian adults who are Angus Reid Forum panellists. The margin of error is +/- 2.5%, 19 times out of 20.