When I get the chance to really talk to friends, family and clients, the one thing that comes up most often is how they are struggling to manage their monthly cash flow. This concern is not just limited to people I’m spending my time with, but rather Canadians as a majority are currently living month to month and for many, living in a debt and spending crisis.
I came across some startling facts in my research for this article. In 2016 Canadians were adding more debt to their balance sheets faster than any other time in history. Currently the average Canadian owes $22,595 of non-mortgage debt. Breaking it down another way, the average Canadian owes $1.64 for every dollar of take home income.
The story does not just stop there unfortunately; we Ontarians have been leading the way nationally in annually increasing debt loads. In 2017 those living here in Ontario added an additional 5.1% of non-mortgage debt, the fastest increase of any province.
Now, owing money when you’re young is nothing new, but shockingly the fastest growing age demographic of debt owners is our senior population.
A survey from Equifax Inc. found that debt, not including mortgages, for Canadians age 65 or older was $15,651 in the second quarter of 2017. Seniors debt grew by 4.3% over the past year, outpacing every other segment of the population over 18.
The unfortunate news on debt is that the major banks in this country make most of their profits selling us debt instruments. It’s important that we are always aware of how lenders love to offer us access to more of their credit. I know it’s hard not to be impulsive, unfortunately most of us are, and this impulsiveness plays right into the hands of those who want us to spend more money via credit, when we probably shouldn’t.
Managing your spending habits takes strong discipline, but one day you will thank yourself. With good habits over the long term you will have more abundance and a less stressful future.
David is with St. Catharines financial firm Capital Wealth Management. He specializes in providing comprehensive financial advice to business owners entrepreneurs and the individual investor.