Consumer confidence is an issue with working-class Canadians. If you’re worried about the economic conditions in your province, you’re not alone.
Although unemployment rates are decreasing, Canadian families appear to be keeping a tighter grip on their paycheques. The Conference Board of Canada reports that consumer confidence fell 5 points in September.
And that’s despite the most recent Nanos survey relaying short term stability in consumer sentiment. This is great, considering that only three years ago, nearly 60 per cent of survey takers said they’d delay major purchase decisions such as vehicles or real estate.
Consumer confidence and new opportunities
Jeff Schwartz, Executive Director of Consolidated Credit Counseling Services of Canada, sees the improved consumer sentiment as a great opportunity for Canadians to recalibrate their budgets.
“Restrained spending might be a bad thing for Canadian retailers but it is going to be a good thing for the Canadian pocket book,” says Schwartz. “Curbing your spending impulses and reinforcing your bottom line will protect you against whatever the economy throws at you.”
Schwartz sees it as a welcome change from the typical short term “buy-now-pay-later” mentality that has left Canadians with heavy debt loads.
“Why stop at the major purchases,” asks Schwartz. “Take a look at your entire budget and see where you can claw back some more of your hard-earned dollars.”
If you see your economic situation improving, now is the time to evaluate your personal finances and get ahead of debt.
Curb economic fears
Take the following steps to build consumer confidence.
Find out where your money is going
Deciding to delay or cancel a major purchase is an easy place to start, but that’s only the beginning. Continue by digging down and analyzing your budget, bottom to top. Remember, no cut is too small – it may just be a drop in the bucket, but it will add up.
Seek and destroy
Make a list of everything you spend money on in a typical month. You may be surprised to find expenses you no longer use, or redundancies. Check your banks statements and receipts for:
- The amount you spend on eating out or buying coffee/drinks
- Subscriptions you can do without (streaming video/music, audio books, cable, or internet)
- Memberships you can cut (Gym, business groups, clubs, etc.)
- Redundancies (do you really need to pay for Hulu and Netflix?)
Often, you can find areas where you’re spending money twice on the same service. Or, you can opt for the free versions of paid products like streaming apps. For example, you can stream music for free, but you may have to hear ads. Or, you can get your exercise by working out at home or trying free trials at different gyms.
Make some lifestyle changes
Your budget analysis may yield some shocking results. Consolidated Credit recommends that no more than five per cent of your monthly income should be spent on entertainment. If you’re giving your local pub more money than you are putting in your savings account, you must make some changes.
Where else are you overspending?
Do you often find yourself indulging in treats, technology, your phone, or gifts for other people? You may find that spending on games, candies, or other nonessentials adds up quickly. How do these purchases affect your wellbeing and your relationships?
Making a lifestyle adjustment can help get you on track financially. More importantly, you can improve your physical, mental, or spiritual health.
Attack your debt
From 1999 to 2016, mortgage debt almost doubled for Canadian families, rising from $91,900 to $180,000. If you are not actively reducing your debt load, you are needlessly devoting a chunk of your budget to paying interest to your creditors. Consolidated Credit’s credit card debt calculator shows that adding even a little bit extra on your monthly payments can dramatically decrease your credit card balance.
Debt payment methods
There are several ways to approach your debt. is A one-size-fits-all solution doesn’t exist. There are two popular ways many people leverage to find success on their debt journey.
- Debt Snowball – In short, the debt snowball requires you to arrange your debts from smallest to largest, and start with your smallest debt first.
- Debt Avalanche – The avalanche method requires you to pay the debt with the heist interest rate first, so you save on interest charges.
Think about what motivates you and consider which best suits your sensibilities.
Pad your savings
Building up your savings account reduces the likelihood of relying on high-interest credit cards in the event of a sudden job loss or other financial emergency. Talk to your bank about automating a contribution to your savings account on every pay day. Aim to create an emergency savings buffer worth three to six months of living expenses.
While that may be overwhelming now, remember that you can start with small steps. If all you do is put a small percentage of your paycheque into an envelope, and stick to it, you’re doing well. If job security is a concern of yours, it’s all the more reason to save.
Commit to some form of regular saving and watch your emergency account blossom relatively quickly. Overall consumer confidence can continue to increase over the next few years if all Canadians make the effort.
Consumer expectations appear to be positive despite insecurity. But before you start filling to those mortgage applications or buying a new car, take a look at your expenses to better understand your position.
Are you trying to attack your debt but find it impossible to get ahead? If you are struggling to make ends meet, building up your savings account might sound like a pipe dream. Luckily, there is help. Our credit counsellors can help you recalibrate your budget and lifestyle in a way that will put you on firm financial footing. Call 1-888-294-3130 or try our free debt analysis to get started.