Fewer Canadians able to save money amid tough economic times: ‘Huge shift and not a good one’

Putting aside money for a rainy day has become increasingly challenging.

With high inflation and rising interest rates, saving money isn’t something many can afford to do anymore.

“Very little, very little,” said Kelowna resident Gil Kafka. “Everything is too expensive.”

The sentiment was echoed by Shane Bump, another Kelowna resident, when asked how hard it is to save money.

“It’s very difficult, everything is more expensive,” Bump told Global News. “You’re not getting the same returns on your money.”

On Wednesday the Bank of Canada raised the key lending rate to 4.5 per cent.

It’s the eighth increase in less than a year.

That combined with high costs for things like groceries and gas has meant there’s little left to grow that nest egg, something that’s vastly different from how it used to be.

“When we go back to the late 1990s … the average savings rate was double digits, 12, 13 per cent, that’s how much we set aside,” said Scott Hannah, president and CEO of the Credit Counselling Society. “Today people aren’t saving. They’re taking their money that was in savings, and they’re spending it to make ends meet. That’s a huge shift and not a good one.”

Not only are people saving less, Hannah said they’re living beyond their means.

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The Credit Counselling Society, which helps people get out of debt at no cost, has seen a 100 per cent increase in clients from this time last year.

“If there was ever a time to make friends with a budget, it’s now,” Hannah said. “Your budget is your best friend and really, you can’t afford to spend more than what’s coming in for an extended period of time. It’ll catch up with you.”

While managing finances is critical to make ends meet, a Kelowna psychologist said it’s also vital to mental health.

Dr. Delaine Shackleton said financial stress can be a big catalyst for depression and anxiety.

“If you start experiencing financial pressure, then you might start doing things like socially withdrawing and find yourself consumed with thoughts about money and how you’re going to make it and then that can lead to anxiety and depression and can be a precursor,” Shackleton said.

That depression and anxiety said Shackleton can then lead to even more spending.

“It’s that quick dopamine hit that you get from spending money,” she said. “It can start to be more financial stress as you’re becoming more depressed because you start spending more to get that dopamine hit.”

For families feeling the pressure, experts say it’s important to include children in age-appropriate conversations about finances.

“Have a conversation with your family saying really, what we need to do is ensure that you’ve got a roof over your head. We’re looking after our families to the best of our ability, and we’re going to need to make some changes so we can continue to do that,” Hannah said. “So that reassurance is important.”

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