One quarter of Canadians did not manage to put any money into their savings in 2018. However, 15 per cent succeeded to save more than $10,000, according to the findings of a poll conducted by Pollara for BMO.
The poll, released Feb. 12, also showed that many Canadians are optimistic about their ability save in 2019. Fifty-two per cent of those surveyed said they definitely plan to save with 31 per cent expecting to save up to $10,000. Twenty-nine per cent of those surveyed claimed to already have more than $100,000 saved.
However, twelve per cent of respondents anticipate that they will not be able to save anything in 2019 and 36 per cent said they were unsure how much they could save.
Barriers to saving
The survey found that barriers to achieving savings goals include: expenses (67 per cent); paying down debt (45 per cent); and, for millennials, 37 per cent cite social pressures as a savings obstacle.
BMO Economics says Canadian household credit burdens rose higher in the third quarter of 2018, “with the key debt-to-disposable income ratio climbing to a near record high of 173.8 per cent. Meanwhile, with interest rates on the rise, credit payments are now starting to take a chunky bite out of paycheques.”
The household debt service ratio (interest and principal as a share of disposable income) has risen to 14.5 per cent, with 7.22 per cent of income being put toward interest payments. This is the highest level in seven years, says BMO. However, debt burdens are also alleviating, with household credit slowing.
"The current environment is putting some pressure on Canadians' finances, making it more difficult for them to put a greater emphasis on regular saving," said Carola Corti, Managing Director, Everyday Banking, BMO Bank of Montreal. "However, it is encouraging to know that Canadians are coming into 2019 with saving top of mind – it's critically important to prioritize putting money aside, even in smaller amounts. One of the best places to start is with a comprehensive plan that takes into account income and expenses, as well as long and short term goals. Once that plan is in place, it will be much easier for Canadians to begin building momentum as it relates to household savings."