A new survey suggests about half of Canadians spend all or more of their net pay and one quarter would be hard pressed to come up with $2,000 in the event of an emergency.
In Canada, 93 per cent of people carry debt and one-third feel overwhelmed by it. Their debt typically consists of mortgages on their homes, credit card debt, car loans and lines of credit. Eleven per cent feel they will never be free of debt.
Most pessimistic about the future
Most think they need one million dollars in savings to retire. They used to think they could stop working at the age of 60, but now say they will have to work until they are 62. And only one-quarter have saved what they need to.
More than one-third don’t expect the economy to improve.
Higher pay not the top priority
“Here’s something that’s very interesting,” says Janice MacLellan, vice-president of operations at the Canadian Payroll Association, which commissioned the survey.
“Despite their challenging financial situation, only 28 per cent of respondents cited higher wages as a top priority. This is down from an average of about 34 per cent over the past five years. Instead, almost half are most interested in a better work-life balance and a healthy work environment.”
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‘You have to take control’
MacLellan finds the results to be concerning: “So in spite of the attention that has been paid on savings and financial literacy programs with the public, we’re still spending most of our net pay and people…don’t appear to be internalizing the messages enough.”
MacLellan recommends people pay themselves first, either by having their employer or financial institution place a portion of their pay in a savings account. She suggests people start small, perhaps putting aside $25 or $50 per pay and building that up to 10 per cent of their net pay which she calls the best financial practice.
“You’d be surprised how quickly that adds up…You have to take control.”
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