Canadians are optimistic about their savings this year, but household finances are still stretched thin, according to a poll commissioned by Toronto-based Bank of Montreal (BMO).
For 2019, half of Canadians (52%) plan to put savings aside, and 31% say they’d like to save up to $10,000, the BMO survey found. Last year, one-quarter did not contribute to savings at all, but 15% saved more than $10,000.
One in ten Canadians (12%) don’t anticipate they’ll be able to save anything this year, and 36% aren’t exactly sure how much they’ll be able to save.
Various factors are holding Canadians back from saving: the majority say household expenses are stretching them too thin (67%); nearly half are paying down debt (45%); and, when it comes to millennial Canadians, 37% say social pressures affect their ability to save.
Canadians’ debt-to-income ratio climbed to a near-record high of 173.8% in the third quarter of 2018, and with rising interest rates, credit payments are also taking a chunk out of people’s budgets.
“There’s no better time to tighten the fiscal purse strings than when interest rates are on the rise,” Sal Guatieri, senior economist, BMO Capital Markets, said in a statement.
“Household credit is now rising the least in 35 years,” Guarieri added, “and with consumers expected to spend at the slowest rate in a decade in 2019 due to higher interest rates and tougher mortgage rules, the debt ratio should stabilize, if not fall modestly.”
Some Canadians are looking to dip into their savings this year: for a trip or vacation (47%), home renovation (20%) or seasonal activities (20%).
Of those saving for the long term, 36% are focused on retirement, although 32% don’t think they’re saving enough. Another 36% are setting money aside for an emergency fund, but many (40%) don’t feel that is enough, either.
The poll also found that some Canadians (17%) are focused completely on getting out of debt.