Canadians are sinking deeper into debt and are increasingly relying on credit to cover day-to-day living expenses, pushing national household debt to $1.3 trillion. This is a highly concerning matter, particularly for Canadian families, and the Certified General Accountants Association of Canada (CGA-Canada) has raised this emerging concern in its research reports on household debt and consumption.
To survive and prosper in the modern world, Canadian families need to have financial capabilities to make informed decisions about borrowing, spending, and saving. For instance, Canadians should use investment savings options, such as RRSPs or TSFAs. CGA-Canada says more is needed in the way of publicly accessible programs on money management, spending and shopping habits, warning signs of financial difficulties and obtaining and using credit.
Tips to save your money and be financial sound:
- Debt is a complex concept and can often represent opportunity. When used wisely, debt can be of tremendous assistance in building wealth or in financing worthy pursuits. Used correctly, debt can afford us post-secondary education, appreciable real estate, and business prospect. Used incorrectly, debt can attract excessive interest charges and unexpected financial difficulty.
- Lower interest rates, in and of themselves, should not be interpreted as a green light to take on even more debt.
- The cost of credit can vary enormously from one product to another and from one lender to another. Take the time to comparison shop and understand the fine print.
- Families should consider their individual circumstances and not the global economic outlook or their credit limit when deciding how much debt they can assume.
- Resist pressure to buy happiness, particularly if it comes from a friend or colleague who appears to have it all. Focus exclusively on your household’s current financial situation and mid-to-long term goals. The debt you take on is just that – yours.
For more information on CGA-Canada’s report on household debt and consumption, visit: www.cga-canada.org
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