When is enough, enough?

We know Canadians aren’t saving enough for retirement. In June 2011 the Royal Bank of Canada released a survey noting 40 per cent of the population were saving less than they did in 2010. But why aren’t Canadians saving? In the same survey 24 per cent said they were finding it difficult to determine how much they could afford to save and 30 per cent said they lacked the discipline to save. If they are lacking the discipline to save does that mean they are spending what they have and perhaps even living beyond their means? 

Helping Canadians learn how to better manage their money and change spending behaviours so they can save for retirement should be a priority for anyone in the finance industry. With RRSP season upon us, which is more important, convincing those with debt to stop spending and pay down their credit card balances or investing the money in their future?

It’s a double-edged sword both saving and paying down debt. They are critically important to one’s financial well-being. However there are good times to contribute to a Registered Retirement Savings Plan such as when you have saved the money, your debt is manageable or you are not incurring additional debt to get the tax refund.

One way for Canadians to be successful at developing the discipline to save is to work with a trained credit counsellor. A credit counsellor will help you to establish a budget and include savings and paying down debt as an expense in the same way as a mortgage or rent payment. One of the best ways to measure financial improvement is to see your net worth grow; that means either your wealth is increasing or your debt is decreasing, and in some cases both.

For those who are finding it difficult to save here are some tips:

• Start small – put away $10 per week into a savings account
• Make saving invisible – use automatic deductions or other tools to do the saving for you
• Set a goal – be merciless until you reach it! (pay off a credit card, or save for a vacation, etc.)

Jeffrey Schwartz is the Executive Director of Consolidated Credit Counseling Services of Canada and President of the Credit Association of Greater Toronto (CAGT). Consolidated Credit is a national non-profit credit counselling organization that teaches consumers about personal finance through web-based budget and debt analysis tools, financial literacy community outreach programs and in-person or telephone counselling. CAGT is a non-profit association with a mission to provide a dynamic forum in which members can share information and expertise.