Canadians are tightening purse strings: plan to cut back and slash debt
(TORONTO, ON) — Canadians are heeding the warnings: household debt is too high, and it’s time to start living within our means. According to Mintel’s Canadian Lifestyles 2015 report, consumers are planning to take a conservative approach to spending this year, putting a priority on paying down debt and being much more careful with discretionary spending.
The report, which surveyed Canadians of all ages, found the following:
- 34 per cent plan to spend extra money on debt repayment, making it the top priority
- Debt repayment is an even higher priority for middle-aged consumers, at 45 per cent
- A third say they have cut back on dining out
- A similar amount (31 per cent) opted to spend more on groceries
While the results show a set of very frugal intentions, Mintel notes that Canadians might be just shy of the necessary resolve.
“While there is a high level of interest (in) achieving financial and personal goals, Canadians are much less inclined to cite that they ‘will definitely do it’ compared to those who ‘would like to, but may not manage it,” says Carol Wong-Li, an analyst at Mintel.
Jeff Schwartz, executive director of Consolidated Credit Counseling Services of Canada, says the goals are indeed achievable, if Canadians shift a few habits in their everyday lives.
“We can very easily bridge the gap between intention and achievement with a bit of planning and determination,” says Schwartz. “If there’s a will, there’s a way, and the way forward is a lot easier than people think.”
Schwartz offers the following suggestions on how Canadians can cut spending and free up money to use for paying down debt:
Know where your money is going. Look at your bank statement and credit card bill and find our exactly what you’re spending money on, and how much you are spending. This can be like a financial intervention for some people – you might be shocked to see how those restaurant lunches add up.
Compare with recommended budgets. Use Consolidated Credit’s suggested budget percentage page as a financial measuring stick and see where you stand. If you’re spending more than 5 per cent of your monthly income on entertainment, you might need to cut back. Everyone’s lives are different and it may be impossible to match the recommended budget, but try your best to model your finances on a plan that meets all of your obligations.
Keep yourself honest. Check your spending after a month to see if you are meeting your budgetary goals. Better yet, download a budgeting app for your mobile device and track your spending on the go.
Do you really need it? The simplest way to live within your means is to apply the very basic test of “wants vs needs” to every purchase you make. If you’re exceeding your budget, there is a good chance that you are giving into your “wants” a bit too much.
Treat yourself. Don’t think of your budget as a ball and chain. It should be liberating, not restrictive. A good budget includes room for indulgences. Best of all, you can enjoy yourself, stress-free, knowing that you’re spending within your limits.
“Canadians are doing the right thing by choosing to pay down their debt,” adds Schwartz. “They’ll free themselves from interest payments, which will mean for an even healthier financial outlook.”
About Consolidated Credit Counseling Services of Canada, Inc.:
Consolidated Credit Counseling Services of Canada is a national non-profit credit counselling organization that teaches consumers about personal finance.
For more information or to request an interview with Jeffrey Schwartz, please contact:
Jacob MacDonald, Public Relations Coordinator, Consolidated Credit Counseling Services of Canada, Inc. T: 416-915-7283 ext.1041 C: 647-390-5253 F: 416-915-5200 E: [email protected]