Canadians concerned about the future of their finances, study says
According to the CPA Canada 2018 Canadian Finance Study, 41 per cent of survey participants believe their financial situation will improve over the next 12 months, while 45 per cent think it will remain unchanged. (Getty Images)
If you ask Anish Chopra, a CPA and investment portfolio manager with Toronto’s Portfolio Management Corporation, whether his clients are feeling good about their finances going into 2019, he’ll say a resounding “yes”. And, according to a new CPA Canada survey, many Canadians feel the same way.
The CPA Canada 2018 Canadian Finance Study found that 41 per cent of survey participants believe their financial situation will improve over the next 12 months, while 45 per cent think it will remain unchanged. Only 11 per cent felt as if their financial well-being would get worse.
“I see these kinds of numbers, too, and part of the reason is that people are continuing to save,” says Chopra, who was pleased to see that 74 per cent of survey respondents said they contribute to their savings every month. “It also has to do with many people feeling that their local economy is doing better.”
BALANCING FUTURE FINANCIAL PRESSURES
Another reason why close to half of the respondents feel positive and most of the rest feel more neutral about their financial situation, may be due to the fact that 62 per cent said they’ve made cutbacks to day-to-day spending over the past five years. Couple that with rising net worth—the average Canadian’s net worth rose by 8.5 per cent in 2017, according to Environics Analytics—and it’s easy to see why people are satisfied with their finances going into the New Year.
However, not all of the results are rosy. The survey found that 39 per cent of respondents would feel financial pressure if interest rates continue to rise, specifically around their mortgage and debt payments, while 23 per cent plan to carry over credit card debt to the next month. As well, 42 per cent of respondents plan to work past the age of 65, with not being able to afford to retire as the reason most often given.
That last statistic stood out the most to Chopra.
“I was surprised by how high that number was,” he says. “That may be because the cost of housing in many places has risen so much that people have had to make adjustments to their lifestyles and work past retirement age. If people made a plan a few years ago, and didn’t adjust for rising living costs, then that would have had a major impact on their plans.” [Request financial literacy session, Planning for retirement]
NEED FOR BETTER FINANCIAL LITERACY
Doretta Thompson, director of corporate citizenship for CPA Canada, adds that while it’s good news that so many people expect their financial situation to improve, it would be better if more respondents felt that way.
“There is still lingering anxiety...about saving for the future and managing current debt,” she said. “This highlights the importance of financial literacy education, in particular, around retirement saving and debt management.”
The only way those numbers will improve is if people pay more attention to their finances, says Chopra. According to the report, many do need to learn more about money, with 49 per cent of people giving their overall personal finance skills a C grade or lower.
Fortunately, people can start planning at any age. The fact that almost half of the respondents admitted they’re not financially savvy is a good start.
“It’s good people are admitting mistakes and understand their gaps in knowledge,” Chopra says. “The financial world isn’t easy, so to be comfortable with your finances is a complex endeavour—but spend time, on your own or with an adviser, to understand financial literacy and you will feel better.” [See Financial planning for peace of mind]
The CPA Canada 2018 Canadian Finance Study was conducted by Nielsen via an online questionnaire answered by 2,042 Canadian adults. Visit cpacanada.ca/canadianfinancestudy2018 for more on the study.