Saving us from the poorhouse
Living in the moment isn’t all it’s cracked up to be once you realize the bills of the future will inevitably come due.
A new study that finds almost a third of Canadian households report never or hardly ever having any money left to save after paying their bills is a sobering reminder of trouble ahead in a society that already seems not highly predisposed to save and plan for the future.
These paycheque-to-paycheque households tend to be working, middle-aged people of varying income levels, according to the report by the Certified General Accountants Association of Canada. But the spectre of zero wealth accumulation hovers just as spookily over many young Canadians today. There are plenty of anxious parents out there all too familiar with the consumption ethic of generation Y —a demographic that thinks of affordability only in terms of whether it can afford to pay the interest on the money borrowed for that flashy new flat-screen TV or Xbox console.
“This consumption pattern that has emerged over the last decade is playing havoc with people’s ability to save,” said Rock Lefebvre, co-author of the accountants’ study.
If it wasn’t bad enough that young people’s incomes have barely kept pace with inflation over the last 20 years, consider this: some 40 per cent of Canadian university graduates aged 25 to 29 are working in low-skill jobs, the second-worst rating out of the 11 countries recently surveyed by the Organization for Economic Co-operation and Development. The resulting rush of re-enrolments into jobs-focused programs isn’t just taxing the barista stands at Starbucks, it’s saddling students with an even greater debt load early in life. Many will be in their fourth decade before they can start building any net worth.
But the fact is many Canadians will be financially unprepared for their retirements simply because they never bothered to plan properly. They took on too much debt and bought heavily on credit. It makes one wonder why savings and budget strategies aren’t part of the regular school curricula.
In the absence of some new financial literacy taking hold, many people now living as though they’ll never grow old will grow old in dependency, and leave many of the rest of us in the lurch for their dotage.