Canadians are finding it harder than ever to save money, and they believe banks should do a better job of teaching them how, according to a recent poll from a group of credit unions.
The study found six in 10 Canadians said their current level of debt does not allow them to save as much as they would like, with three in 10 (31 per cent) unable to save any money at all.
Household Debt Rises, Personal Saving Plummet
Schools educate youth about geography, history and mathematics, but when it comes to financial literacy we’re on our own. While household debt continues to climb, the personal savings rate is shrinking. The average Canadian household owes $1.63 for every dollar in disposable income earned, according to Statistics Canada.
“In the last 20 years, the personal savings rate in Canada has plummeted while household debt has grown dramatically,” explains Marie Mullally, president and chief executive officer of Credit Union Atlantic. “More needs to be done to develop innovative options to help Canadians and their families develop healthy financial habits that will allow them and our economy to thrive. That is why our group of credit unions will be working together to develop new and smarter ways to help Canadians overcome their personal debt and begin to put more money aside for the future.”
Banks Should Step Up To Fill Knowledge Gap
Canadians would like to see their financial institutions play a more active role in financial literacy. The poll revealed the following recommendations: providing specific banking products for children that encourage good habits (62 per cent), and providing new and innovative banking products that focus on people, not profits for the bank (59 per cent).
Financial institutions come in all shapes and sizes from banks to credit unions. So who’s doing the best job of educating Canadians? Canadians ranked credit unions (70 per cent) as good at helping them improve their financial well-being, slightly ahead of banks (66 per cent) and other financial institutions (61 per cent).
Educating Future Generations
Many Canadians believe in the importance of setting good saving habits at a young age. Six in 10 (61 per cent) of parents wish they had been instilled with the importance of savings at a younger age. Ninety four per cent of parents agree that if Canadian youth are taught about savings at an early age it will lead to better financial management practices in the future.
Have the Family Finance Talk
Unfortunately, not all parents are practicing what they preach. Only 44 per cent of parents speak with their children about money, finances, budget and savings, with only 16 per cent involving their children in money management decisions. One in five (19 per cent) of Canadians do none of these things.
“We all know that children learn by example, but it’s difficult to help your children develop good savings habits when you’ve got so much debt you can barely make it from one paycheque to the next,” says Bruce Howell, president and chief executive officer of Prospera Credit Union. “As credit unions, we’re dedicated to the financial well-being of our members and what’s become increasingly clear to us in recent years is that financial institutions need to do more to educate Canadians to help them get out of debt and make smarter financial choices.”