According to a new study by the CGA Association of Canada, 1/3rd of Canadians are living paycheck to paycheck 🙁 The consensus was that the people surveyed believed their incomes were not “keeping pace with the cost of living.” Sigh (-_-;) If only they understood how to hedge their expenses against inflation protected investments like consumer staples that have a history of growing dividends faster than CPI such as Coke, McDonald’s, Johnson & Johnson etc, or real estate assets like commercial or agricultural land, then they would probably be in a better financial situation today.
The report discovered that only 3 out of 10 households believed accumulating wealth is a very important priority. Just like almost anything else in life, you get what you put in. I believe if you focus on your own personal finance and make economic prosperity a personal goal then chances are pretty good you WILL save and build wealth 😉 I bet if 10 out of 10 Canadians viewed being rich as a priority we would have less poverty and a higher savings rate overall. Since almost a 3rd of our population never or almost never have any money left after paying the bills it would be very difficult for the Bank of Canada to increase interest rates, which means if you have debt like I do then we won’t see our financing costs go up in the near future 😀 Leveraging cheap money hasn’t failed me yet in the past so I will continue doing so for now rather than pay off my debts 🙂 I’m currently borrowing to invest in more farmland. Globally this asset class is growing very fast, even in the UK.
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Personal News
I recently sold $5K in my TFSA to add to my farm fund. Will have to update the numbers later. I also got a letter in the mail last week from my credit card company giving me a 1.9% interest rate for 6 months on any loan transfer 😀 I plan to get another $5K out of that deal. Also I created a new page about investing on my blog relatively recently.
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Random Useless Fact: Karma can be cruel.
Yeah, I think it’s rather sad that saving money comes LAST to most people. After they pay off their bills, after they buy their toys, after they spend money on useless crap. Only they they say – well, some money is left over, let’s save it. While it should be the other way around. First you take the money for savings, then you spend the rest.
Would be interesting to know what percentage of people’s income is going into savings these days. Something tells me it’s not much – may be 5-10%…
By the way, enjoy reading your blog. Recently started mine myself, check it out if you have a second!
I believe the savings rate in Canada is around 4%, not very high unfortunately. But back in 1982 it was nearly 20%. Thanks for dropping by. You have a pretty cool blog. Glad we share similar financial goals 🙂
I think I’ll do some research on that – would be a cool blog post subject.
4% is really low. They say you need to save around 10-15% if you ever hope to retire comfortably.
Interesting! And that’s crazy that 1/3 of people live paycheque to paycheque!
It really thwarts someone’s financial flexibility if they’re not saving, but it’s a sad reality for many people.
That is sad that 3 out of 10 people think accumulating wealth is important. Hopefully our blogs will help change peoples minds 🙂
It might a cultural thing. Some countries in Europe like Switzerland and Germany save about 10% to 15%. In Asia, both China and India, despite so many people still living near or below poverty level, still manage to save on average more than 30% of their household incomes. I think if the survey was done in those countries, then there would be a lot more than 3 out of 10 people who would think wealth building is important.
I’ve always considered my family living paycheque to paycheque… I have answered many surveys this way too. We plan all of what we do around what is coming in… The difference is we planned over the years to invest 40-50% of each paycheque (we were both working). I still considered it living paycheque to paycheque, because it was covering current obligations as well as expected future obligations. That said, now that I am no longer working, I guess because we “live” on about 90% of her paycheque each month my family is living closer to the true definition of living paycheque to paycheque. Now before you get sad and teary eyed lets take it into to some perspective. We own 2 homes, no mortgage, no debt and 7 figures invested… Perceptions may not be as they seem, especially with statistics and studies. Food for thought, but how would a public servant answer this survey? Keep in mind they can live paycheque to paycheque and still in the end have a nice pension. Great thought provoking post as always! – Cheers.
I’ve never participated in any of these surveys before. I wonder why they don’t ask me lol. It’s true that these studies don’t give an accurate look at people’s finances because there are a lot of overlooked issues. It’s the same problem with trying to get a mortgage; a couple with a steady job and defined benefit pension who never plans to have kids is just as financially stable in the lender’s eyes as another couple making the same income, but have 3 kids and no retirement savings or any pension plan. Only certain factors like debt to service ratio and loan to income ratio are used, but the bigger picture is often ignored.
Wow, living paycheck to paycheck is one thing…that stat on accumulating wealth is another. Like you said, you get what you put in. Sadly, many of these people will not be getting much.
Yeah I expected a higher number for accumulating wealth. And saving money doesn’t have to be hard. Next time someone feels like a bottle of beer, just drink some water instead. And voila, they’re $3 richer. Do that 10 times and they’ve just accumulated $30 of wealth which they can invest and use for another day. 10 years ago one could buy a share of McDonald’s for $30. Today each share is worth over $100. It’s never too late to get into a good stock because 10 years from now MCDs could trade for $200, who knows. I don’t think people should necessarily trade alcohol for a healthier lifestyle and financial stability, but it’s a choice we all make.
Accumulating wealth is seen as evil these days. Not surprised.
What has our society come to :0(
There is nothing wrong living paycheck to paycheck. Many companies do it, many governments keep on borrowing money from future generations…
Why should we be different? It is matter of managing stress and anxiety. If you can live with it – it is quite OK to do it.
Many people received very little from the stock market. Many simply do not have enough to make difference.
Lets assume you can put aside $200 a month, or $2,400 a year. You squeezed money, cancel vacation…. what do you have instead? 70 dollars a year as dividends?
Would you do it to your kids 20 years in row, to get 1,400 a year in 20 years time?
The fact is the most families do not earn enough to make any difference to their financial situation…
Do you know that suicide among farmers in the UK is one of the leading cause of deaths?
I’ve heard the farming life is not easy for those in the UK, Australia, and other countries. Canada is a great place to be a farmer, especially dairy, eggs, or beef because of the supply management system we have here. It’s a pretty big political topic because it’s stopping trade agreements with Europe, Asia, and other part of the world because nobody wants to do business with a country that’s very protective of its industry. But on the other hand, if we opened up the market and let Canadian farmers compete like everyone else is then maybe they won’t do very well and many would go out of business. Touch choice :S