Not even an economic downturn will convince Canadians to save for safety’s sake, a survey from Bank of Montreal suggests.
The first of three national reports on spending and saving, which BMO conducted in December and published mid-January, says nearly seven out of 10 respondents admitted they do not have a financial plan in place, and more than 40 per cent of Canadians don’t have any type of emergency savings set aside should their financial circumstances suddenly change.
But perhaps the most hackle-raising conclusion of all was that 80 per cent felt the economic downturn is not enough of an incentive to create a financial plan, says Judy Thomson, director of retail investments at BMO.
“Really, what does it take for people to know they need to have some kind of plan in place?” she said. “You’d have to be living in a cave somewhere not to have an understanding of the urgency that’s going on in the market today. And these are recent findings, taken after the economy really started to hit people. It certainly surprises me.
“People have no idea of their cash flow — how much they’re bringing in, how much they’re spending. If they found themselves in an emergency, where would they go?”
There’s a certain mindset that keeps Canadians from properly saving and investing, says Thomson. Those without savings plans assume they only exist for the wealthy, and the perilous habit of “get it now and pay for it later” dies hard.
“I think if you read everything about this downturn, it’s that attitude that got us into this situation. You can see that across the border when it comes to housing,” she said.
“We’re avoiding dealing with it and the fact that so many are without a basic financial plan proves the point.”
However, the report did make its brighter points despite all the doom and gloom.
Of those with RRSPs, the survey found Canadians felt they needed to exercise more caution. Nearly 70 per cent of Canadians with RRSPs say they will not need to withdraw from it to meet their financial needs, and 60 per cent say they’ll contribute as much this year as they have before.
Thirty-eight per cent, however, say they don’t plan to contribute this year, believing they’ll need the money to get themselves through the tough times — a state of affairs that would be more easily weathered, Thomson says, if Canadians looked for help.
“We spend more time thinking about our vacations than we do thinking about our retirement. It seems so far away, and so complicated. It’s not,” she said. “You can go into a bank and get free advice from the most basic to the most complex. Dealing with an investment professional helps you understand what you’re buying and establish a financial knowledge of what you already have.”
Money management tips online
• Want to brush up on money management? The website fcac-acfc.gc.ca, run by the Financial Consumer Agency of Canada, features a variety of useful interactive tools to educate Canadians on financial literacy. Features include a mortgage calculator, reports on credit cards, their interest rates and tips on how to manage them, and guides to banking across the country.
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