Published On: Tuesday, 28 November 2017

Why is it so Hard to Save? Most Canadians Aren't Making it a Priority

Why is it so Hard to Save? Most Canadians Aren't Making it a Priority
Canadians admit they could save on average $360 more each month and receive $2,280 in 'extra money' annually but lack the discipline to save.

CANADA - The vast majority (85 per cent) of Canadians agree that they 'need to save more money', but nearly two-thirds (64 per cent) are not making savings a priority, finds a new CIBC poll. And, while most admit they could get by with less, few do, and many say 'extra money' is for 'pleasure or enjoyment'.

The majority of Canadians know they need to save more, but nearly two-thirds aren't making savings a priority.

Key poll findings include:

  • 85 per cent of Canadians agree that they 'need to save more money';
  • 64 per cent say they lack a detailed or regular savings plan, including 26 per cent who 'don't really save' or 'never save' at all;
  • 82 per cent admit they could 'cut back' each month by on average $360 'before feeling the pinch';
  • In addition to their regular income, nearly two-thirds (62 per cent) say they receive on average $2,280 in 'extra money' each year, and as much as $13,100 in the form of cash gifts, employer bonuses, and tax refunds.
    • But, less than half (44 per cent) 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, most (66 per cent) use it to buy themselves gifts, pay everyday expenses, or to chip away at consumer debt. Only two in five (41 per cent) will put those extra funds aside for an emergency, or to boost retirement savings.
  • 79 per cent of those aged 35-54 worry about not having enough money to retire when they want to;
  • 53 per cent of Canadians say they'd use credit or borrow from friends and family if faced with unexpected $1,000 expense; and
  • Top hurdles to saving are: not earning enough income (46 per cent), getting derailed by unexpected expenses (29 per cent), and struggling to pay everyday expenses (24 per cent).

Based on this data, consumers must adapt:

  • With interest rates expected to edge higher and people living longer in retirement, Canadians need to do more than simply spend less.
  • The poll findings show that simple saving habits work best, with more than half (55 per cent) of Canadians agreeing they'd be more likely to save if a set sum went automatically off their pay and directly into a dedicated savings account.
  • 5 hacks for fail-proof savings:
    • Get into a savings mindset;
    • Set a goal;
    • Decide how much you can cut back;
    • Make it automatic and frequent; and
    • Keep spending and credit in check.