A recent study by Manulife Bank revealed a startling fact: more than half of Canadians (53%) have some form of non-mortgage-related debt. While credit card debt has seen a decline, other types of debt like personal loans, home equity lines of credit, and the like have seen an increase. This signals a shift in debt management strategies, with people moving their debts to lower-interest platforms.
The Devastating Consequences of Uncontrolled Debt
While it’s commendable that Canadians are trying to manage their debt and lower their interest payments, the sheer number of people carrying debt is concerning. Let’s take a closer look at the survey results:
- 33% of Canadians reported that their spending growth is outpacing their income growth.
- Nearly 40% of Canadians who have accumulated debt did so because of living beyond their means; 19% cited the inability to break the debt cycle.
- 9% of Canadians have no idea how much they spend on average every month.
These startling statistics reveal a worrying trend. With easy access to credit, it’s all too easy to fall into a cycle of debt without feeling its immediate impact.
Strategies to Regain Control of Your Finances
While I haven’t personally struggled with debt, I’ve always lived by three financial rules:
- Always spend less than what you earn.
- Prioritize saving money.
- Take advantage of free money when offered.
It’s shocking how many people spend more than they earn. If you’re spending more than you’re earning, you need to create a budget and stick to it. If you’re already in debt, devise a debt repayment plan to get back in the black.
When it comes to saving, make it a priority. Set aside money for vacations, retirement, and other long-term goals. Many people wait until the end of the month to see what’s left to save, often finding nothing left.
And as for free money, I’m talking about pension plans or RRSP matching that your employer may offer. If you have this benefit, make the most of it.
Concluding Thoughts
Establishing a solid financial foundation early on is crucial for meeting your monetary goals. But even if you’re already in debt, don’t panic. Develop a plan to eliminate your debt and start saving for your future with a high interest savings account.
