A recent report released by the Certified General Accountants Association of Canada has shed some light on the current financial situation for Canadians, and it’s not all good news.
Here are some of the findings from the report:
*One quarter of Canadians would not be able to handle unforeseen expenditures but yet Canadians save even less than before. We need to plan ahead and save some money each pay period in order to build up an emergency fund. Who knows when you’ll need that $2000 root canal?
*Canadians are increasing their household debt. Consumption rather than asset accumulation remains the primary cause of the debt run up. There is a significant difference between good debt and bad debt. Consumer debt is bad debt but using debt to purchase an asset that will appreciate in value is good debt. Try to avoid consumer debt and only buy consumer goods with money you already have.
*Four in 10 Canadians do not feel confident that their financial condition at retirement will be adequate. Start saving now in an RRSP and a TFSA for retirement. Even if you don’t make a lot of money, create a savings budget and get in the habit of paying yourself first.
*If household debt was to be evenly spread across all Canadians, each individual would hold some $41.740 in outstanding debt in 2009. What can I say, but “Ouch!”
*Some households may have to cut their spending by 9%-11% to accommodate the increase in interest rates. Interest rates will likely be rising soon. Be proactive and consider a fixed rate mortgage if you don’t think you will be able to afford your variable rate payments.
*The majority of individuals with increasing household debt were either very concerned (40%) or somewhat concerned (46%) with the fact that their debt has increased. It’s good that we are concerned. Then maybe we will do something about it.
The CGA report contains detailed information on the Canadian situation. To find out how you measure up to the average Canadian family, check out the full report.
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