Canadians falling short on saving

Scotiabank survey finds that nearly one-third don’t have a plan

Published On Tue Jul 13 2010

Madhavi Acharya-Tom Yew
Business Reporter

Ninety-four per cent of Canadians say they feel better when they have a safety net of savings to fall back on.

But nearly one-in-five, or 19 per cent, haven’t put any money aside for a rainy day, according to a survey released Tuesday by Scotiabank.

Personal finance experts say everyone should have an emergency fund that would cover one to three months’ worth of household expenses.

The bank’s survey found that one-quarter, or 25 per cent, of those surveyed have that much set aside. Another one-third have more than three months’ worth, and 23 per cent have squirreled away less than one month of expenses.

Sixty-eight per cent of Canadians say they have a plan in place to achieve their savings goals.

But nearly one-quarter, 23 per cent, say they like to live day-to-day and do not worry about saving money.

“We’re really become a consumer society and we are encouraged to spend. Having the discipline to put aside part of your income for the future or saving for discretionary needs are not things we are necessarily guided to do,” said Chris Hodgson, Scotiabank’s head of Canadian banking.

“There’s an opportunity to raise a level of awareness on how Canadians can build more of a nest egg. To us, this is an issue for Canada.”

Figures from Statistics Canada show that the personal savings rate was 2.8 per cent in the first quarter of 2010. That’s down 0.7 per cent from the last three months of 2009 and a decline of 2.4 per cent from the previous year.

Scotiabank released the survey as part of the kickoff to its Let the Saving Begin program. The goal is to “break the inertia around saving and help spark a movement among Canadians,” the bank said.

It has recruited broadcaster Valerie Pringle to travel across the country to speak with Canadians about the challenges they face when trying to put money aside.

“It’s like we’ve been living in a fool’s paradise of cheap money and buy, buy, buy, and our grandparents concept of saving to buy a refrigerator sounds like something from the dark ages,” Pringle said in an interview.

“There’s a lot of pressure on people, on families, and their wallets. We want to make Canadians aware that small steps can make a difference. Figure it out, get some advice, make changes and make yourself more financially healthy.”

Nearly three-quarters, or 72 per cent, of Canadians surveyed said that saving an additional $1,500 would improve their financial well-being.

“That’s about $4 a day. It’s not a huge amount,” Hodgson said.

Scotiabank will match 10 per cent of savings up to $150 accumulated between July 5, 2010, and Oct. 31, 2011 using automatic savings plans. Details are available on the bank’s website.

The online survey, conducted in late March, also found that the majority of Canadians, 83 per cent, said they would make some change to their spending habits to save more money, with 20 per cent saying they would make large changes and 63 per cent saying they would make small changes.

“We’re talking about creating a balance between borrowing and saving,” Hodgson said. “We’re not suggesting Canadians should be moving away from borrowing to buy a house or a condo or get an education, but there has to be a balance between the two.”