If a strong Canadian economy translates to better wages for your clients, they might benefit from a reminder to put extra cash toward paying down debt.
A survey by the Canadian Payroll Association finds that 66% of working Canadians report being in a better financial position than a year ago, but many continue to face financial challenges.
While there’s been a positive shift in the number of employees with total household incomes over $125K, along with low unemployment figures, 44% of workers say they’d have difficulty meeting their financial obligations if their paycheques were delayed by a week. (On a positive note, that figure is down from the three-year average of 48%.) And one-fifth of working Canadians say they couldn’t come up with $2,000 within a month for an emergency expense (down from one-quarter previously).
Encouragingly, fewer employees say they spend all or more than their net incomes (35% compared to the three-year average of 40%), and 69% of those trying to save more report they’ve been successful at doing so. Still, 65% said they save 10% or less than their earnings.
While some working Canadians are in an economic position to save more, they may require help to understand the risks they face, and to take appropriate action.
For example, debt levels are increasing among some working Canadians, with more than one-third (34%) of survey respondents saying their debt loads have increased over the year, up from 31%.
Further, more Canadians are expecting to take longer to pay down their debt: 43% say it will take more than 10 years, up from 42% a year ago and 36% in 2016. More than one in 10 (12%) believe they’ll never be debt-free.
Overall, 94% of respondents carry debt, including mortgages (28%), credit cards (18%) and car loans (18%).
Higher living expenses (27%) and unexpected expenses (20%) remain the top two reasons for increased spending, and most (96%) anticipate their cost of living will increase over the coming year.
For the first year ever, the survey results indicate that employees are more concerned with work-life balance (33%) than with earning higher wages (26%). This is especially true of those in their 30s (38% rank work-life balance as most important).
When asked about the best way to improve their financial well-being, the number one response was higher wages (25%), versus spending less (19%).
And, while 72% concede they have saved only one-quarter or less of what they feel they will need to retire, the target retirement age of 61 hasn’t changed from 2017 and half still feel they need at least $1 million to retire.
For more details, read the full survey.
About the Canadian Payroll Association survey: A total of 5,074 employees from across Canada, and from a wide range of industry sectors, responded to an online research survey between June 22, 2018, and Aug. 1, 2018, using a convenience sampling methodology.