A majority of Canadians say they feel healthy financially but there is a worrisome lack of planning for the potential negative impact of changes in the economy, says a new study.
In a recent online poll conducted for Chartered Professional Accountants of Canada, 59 per cent of households said they are living comfortably and doing well financially. And 70 per cent of mortgage holders said they are having no problems making their mortgage payments.
But more than half – 53 per cent – of non-retired respondents said they do not save on a regular basis even though 65 per cent of all households assessed the level of their financial discipline as somewhat or very strong, according to the poll.
Only 60 per cent of households with debt said they paid off a portion of their debt on a regular basis.
More than half – 51 per cent – of non-retired households said they do not have a special reserve fund for financial emergencies, in addition to regular savings for other purposes, according to the survey results.
CPA Canada expressed concern over the possibility of a new growth wave of household debt.
"It may be a matter of perception. Factors such as lower interest rates, cheaper gas and a strengthening U.S. economy may have some people thinking things are just fine," CPA Canada president and chief executive officer Kevin Dancey said. "However, no matter what happens with the economy over the coming months, the lingering issue of high debt levels cannot be ignored."
Getting people to change their financial habits is not easy and may require a national discussion involving governments and other stakeholders, CPA Canada says.
The federal government's appointment of Jane Rooney as Canada's first financial literacy leader is a step in the right direction, executive vice-president of CPA Canada Joy Thomas said.
Among the major factors to watch out for in an uncertain economy are the decline in the price of oil and interest rates. The fall in oil prices will continue to have a negative impact on the Canadian economy as oil exports decline and companies reduce their investments and hiring plans, CPA Canada said in the report published Monday.
Other findings:
- 16 per cent of non-retired households said they expected a negative change in their personal financial situation because of the changing economic outlook.
- In Alberta, 34 per cent of respondents said their personal financial situation would worsen due to changes in economic conditions.
- 24 per cent of respondents said they do not usually monitor the key external factors that could have an impact on their financial wellbeing.
- 79 per cent said they did not fall behind on any type of payments in the past 12 months.
- Canadian households accumulated net worth at an annual average rate of 5.7 per cent from 2012 to 2014.
The data were collected in February of 2015 by an unnamed outside firm and CPA Canada did the analysis and wrote the report, said spokesman Tobin Lambie. The survey is based on a sampling of 1,500 individuals aged 25 and over and has an error factor of plus or minus 2.19 per cent, 19 times out of 20.
Bertrand Marotte