Living paycheque to paycheque may not sound ideal, however, it is a stressful reality for many Canadians, as shown in a new survey from the Canadian Payroll Association (CPA). The CPA recently released the results from its ninth annual Survey of Employed Canadians and found that almost half of employed Canadians (47%) would struggle if their paycheque was delayed by even a week. This number increases for millennials in their 30s (55%), and for those in their 40s (51%). Comparatively, 41% of Canadians spend all or more of their entire paycheque, and most cite higher costs of living as the cause. This number, however, drastically shifts depending on where you live. Only a third of those in Quebec spend all or more of their net pay, while 59% are living paycheque to paycheque in British Columbia. Ontario seems to line up with the national averages, as 49% live paycheque to paycheque while 42% spend all or more of their pay.
Lack of emergency funds or savings
The survey also asked employed Canadians how difficult it would be to come up with $2,000 within a month’s notice, in the case of an emergency. Nearly one in four wouldn’t be able to collect the money, whether it be through savings or extra earnings. Regionally, Atlantic Canadians seemed to struggle the most financially. A third of those surveyed felt they would have trouble getting the $2,000, in comparison to only 17% of those in Quebec. And while the CPA suggests Canadians put away at least 10% of their paycheques into savings, 42% say they save 5% or less of their pay. Once again, Atlantic Canadians are put on the spot as more than half (56%) say they only save 5% or less, while only 30% of those in Saskatchewan can say the same. People in Saskatchewan proved to be the most diligent savers nationally, as 43% saved more than the recommended 10%.
High levels of debt
The CPA survey is putting a spotlight on the tight pocketbooks of many Canadians, so it’s likely not surprising many are carrying debt. The survey found over a third of Canadians are overwhelmed by their level of debt, and 42% think it’ll take 10 years or more to pay off their current debt load. In comparison, about half of Atlantic Canadians feel overwhelmed by debt. They also reported the highest rates of car loan debt out of all Canadians. Those in Quebec and Ontario seemed to feel the least overwhelmed by debt (20% and 37%, respectively).
Saving for retirement less of a priority
As many people struggle with their day-to-day expenses, planning financially for the future becomes less of a priority. About three-fourths of those surveyed said they only have 25% or less of their retirement money saved. Atlantic Canada has the highest percentage of respondents nationally that have saved nothing for retirement (21%). And about half of Canadians feel they need, at least, a million dollars saved in order to retire.
How to start saving, even if it's just a little
As mentioned before, CPA suggests Canadians save at least 10% of their paycheques, but it can be a hard goal to reach at times. Here are some tips to get you started:
- Track how much you spend in a week and where you spend it. You may find you are spending a lot of money in an area that’s not essential (for example, dining out).
- Create a realistic budget based upon your essential costs (rent or mortgage payments, food, bills, etc..) and calculate how much extra money you have after those bases are covered. Calculate the 10% of your paycheque you want to save and include that in your budget.
- Set a limit on how much you want to spend on non-essentials, and be honest with yourself. It’s unrealistic to expect you’ll never want to buy a new shirt or go out for dinner. Plan for those expenses, but keep it modest.
- Meet with a financial advisor and find a savings plan that works best for you. They can probably recommend a good savings vehicle like a TFSA or an RRSP that can accumulate a decent amount of interest, making your money work for you.
- Use credit cards that earn cash back or points in areas where you usually spend, like gas or groceries.
President’s Choice® offers two credit cards that work just like a points card, making it a great choice specifically for grocery rewards. While the President’s Choice Financial MasterCard offers 10 PC points per $1 spent, the President’s Choice Financial World Elite MasterCard offers 30 PC points per $1 spent at participating grocery stores where President’s Choice® products are sold, on top of 10 PC points per $1 everywhere else.
- If you have a large amount of debt, pay off the areas with the highest levels of interest rates first (credit cards, payday loans, etc..). Work with your financial advisor to find a way to pay off the debt and, if needed and possible, consider consolidating the money owed or find lower interest options.