Vancouver Condo Info

Canadians not ready for downturn

RBC has released a report on the saving and spending habits of Canadians, apparently we’re saving less than ever, with more Canadians relying on credit cards, loans and mortgages.

Canadians are not prepared - and not preparing - for a rainy day, like an economic downturn, a major bank is warning.

The vast majority of Canadians admit they’re poor savers, with barely one-half having a rainy-day account. And of those, only half have enough to cover a month’s expenses, RBC said Wednesday in releasing results of a spring survey of the saving and spending habits of Canadians.

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“One need only look at the newspapers or television to see that North America is in an economic downturn,” said Ashif Ratanshi, senior vice-president, RBC Branch Investments and Banking.

“This is the time for Canadians to re-assess their own finances and ensure they are effectively managing their money so that they can withstand any sudden pitfalls or changes in their lives.”

I’ve already run a poll on savings and income that indicates most readers here are in the minority, but since the RBC reports refers specifically to a rainy-day account I’ll pose this question:

Do you have a ‘rainy-day’ savings account for emergencies?

• Yes, enough for 1 month in a seperate account
• Yes, enough for 3 months in a seperate account
• Yes, enough for 6 or more months in a seperate account
• No, but I try to keep at least $1000 extra in my main account
• No, I’m living paycheck to paycheck right now.

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24 Responses to “Canadians not ready for downturn”

1. 1
   Ted Says:
   May 21st, 2008 at 4:13 pm
   “And of those, only half have enough to cover a month’s expenses”

   Pathetic!

2. 2
   read on Says:
   May 21st, 2008 at 4:45 pm
   worrying, more like

   well, not for me, but for them

3. 3
   Anonymous Says:
   May 21st, 2008 at 4:55 pm
   Why save with so much credit available?
4. 4
   --A- Says:
   May 21st, 2008 at 4:59 pm
   Problem is almost everyone I know has become an Economist of Nobel Prize rank.

   They reason….everyone wants to live here, and we have natural resources to boot.

   No RE Bubble, no commodities bubble, yeah okay.

   My view: we have a commodity bubble, a RE bubble, and a credit bubble to boot!

5. 5
   macchiato Says:
   May 21st, 2008 at 5:26 pm
   ‘nother one bites the dust:

   http://www.liveatanvil.com/

   they are asking pre-sale buyers to buck up 20-40K more or else have their deposits returned.

   they are apparently reputable: http://www.udi.bc.ca/

6. 6
   Drachen Says:
   May 21st, 2008 at 6:18 pm
   Ted

   “Pathetic!”

   Arrogant prick!

7. 7
   Brittanny Spears Says:
   May 21st, 2008 at 7:05 pm
   “Canadians are poor savers” Can’t imagine why this is? It must be mostly because of our extravagant lifestyles. I don’t think it has anything to do with:
   - real estate prices
   - gas prices
   - food prices
   - income tax
   - banking costs
   - sin tax
   - GST
   - energy costs in general
   - inflation
   - etc. etc. etc.
8. 8
   emile Says:
   May 21st, 2008 at 7:31 pm
   sin tax ???
9. 9
   patriotz Says:
   May 21st, 2008 at 7:31 pm
   The plain fact is that there are countries with higher taxes and higher cost of living right across the board (Germany, Scandinavia for example), or much lower incomes (Asia) which have higher savings rates than us.

   If people choose to save they will save. It’s a matter of priorities. That’s all there is to it really.

   And it would have been interesting if that study had broken out results by province. I think BC would probably be the worst by a mile. Remember our -8% savings rate.

   I think this province has set itself up for a clobbering in the upcoming recession.

10. 10
    blueskies Says:
    May 21st, 2008 at 7:32 pm
    And of those, only half have enough to cover a month’s expenses”

    i read somewhere that the median savings on an individual basis was merely $2500… a little scary

11. 11
    Re-diculous Says:
    May 21st, 2008 at 7:40 pm
    Garth Turner has posted “Condo Crack” refering to his Bill Good interview this morning

    http://www.greaterfool.ca/2008/05/21/co … /#comments

    …am I reading this correctly? Looks like pumper-Bill was RENTING a 1.6 million dollar unit which he was foced out of because the owner wanted to sell. LOL

12. 12
    exx Says:
    May 21st, 2008 at 8:16 pm
    Here’s the CBC article to the Anvil that macchiato posted above.

    “United Properties, the developer behind The Anvil in New Westminster, has run out money, and that means pre-sale buyers are being asked to pay an additional $20,00 to $40,00 if they want to keep their condos.”

13. 13
    --A- Says:
    May 21st, 2008 at 8:36 pm
    “Maybe the Urban Development Institute representing the developers … should have a mediation process. Maybe there should be somebody there to look after the consumer,” Rennie said.”

    Sure Rennie, perhaps we should have a process in place whereby if the flippers make money they keep it, if they lose money the taxpayer picks up the tab.

    And perhaps, Bill Good, Muir, Pastrick, and the VANOC mob, should administer the plan.

14. 14
    blueskies Says:
    May 21st, 2008 at 8:53 pm
    And perhaps, Bill Good, Muir, Pastrick, and the VANOC mob, should administer the plan.

    …like having the coyotes design the security system for the chicken coop..

    -A-… you sl-A-y me

15. 15
    patriotz Says:
    May 21st, 2008 at 9:31 pm
    Pre-sale buyers (at the Anvil) have received letters from the developer saying they have 14 days to decide whether they want to pull out and get their deposit back or pay the additional costs.

    Is that a no-brainer or what?

    Take the money and run.

16. 16
    Michael Randallbard Says:
    May 21st, 2008 at 10:54 pm
    Lest We Forget a Certain Little Bet
17. 17
    Michael Randallbard Says:
    May 21st, 2008 at 10:55 pm
    http://www.kitco.com/ind/AuthenticMoney/may202008.html
18. 18
    Drachen Says:
    May 22nd, 2008 at 6:51 am
    patriotz

    “…higher taxes and higher cost of living right across the board (Germany…”

    I’ve lived there and I can tell you the taxes are higher but the cost of living is lower. Scandinavia as well I believe.

    But more importantly for families starting out both have subsidized daycare (free through most of Scandinavia I believe).

19. 19
    Warren Says:
    May 22nd, 2008 at 7:51 am
    When you refer to a rainy-day account, what is that exactly? I have plenty of assets and zero debt, but I don’t see the point in holding too much money in some “high interest” savings account which is really being eroded by inflation.
20. 20
    Deliverator Says:
    May 22nd, 2008 at 11:58 am
    When you refer to a rainy-day account, what is that exactly? I have plenty of assets and zero debt, but I don’t see the point in holding too much money in some “high interest” savings account which is really being eroded by inflation.

    I would concede your point, Warren, but it still makes sense to have a couple of months (at least) expenses in cash (or some other highly liquid asset) quickly available for emergencies.

21. 21
    Aleks Says:
    May 22nd, 2008 at 1:24 pm
    How much to keep in an emergency fund is a separate discussion, but the fact that you’re even considering it probably puts you in the “six months or more” category. The question isn’t “How much of your portfolio is in cash?”, it’s “How much money do you have saved, period?” Half the population has nothing saved, and another quarter only have enough for one month’s expenses. When you start quibbling over whether to keep $5000 or $10,000 in a savings account, you’re already in the 90th percentile at least.
22. 22
    Deliverator Says:
    May 22nd, 2008 at 4:23 pm
    The question isn’t “How much of your portfolio is in cash?”, it’s “How much money do you have saved, period?”

    Actually, the question was:

    Do you have a ‘rainy-day’ savings account for emergencies?

    That, IMHO, reads a lot like ‘cash’ to me. It would not include investments like stocks, bonds, mutual funds, etc. That was the subject of a survey a couple of months back, IIRC.

23. 23
    Anonymous Says:
    May 22nd, 2008 at 6:53 pm
    I don’t know if I understand what constitues an emergency savings account, but I’m imagining something highly liquid, that loses purchasing power over time.

    I think of my untapped HELOC as my emergency fund. It serves the same function, but costs nothing.

    If I lose both jobs, can’t find another, my HELOC is frozen, I can’t sell or rent my house and I’ve burned through my RRSPs and other assets, then a rainy day “savings account” probably wouldn’t make much difference.

    As long as I have credit avaiable, I don’t see any reason for emergency savings. Long term savings sure, but not emergency savings. I would only put up with inflation and taxes eroding my earnings in an emergency “savings account” if I anticipated a reasonable high likelihood of needing the money very soon.

    Wouldn’t that explain the findings? Many don’t need an emergency fund, and for those that can’t save a meaningful emergency fund, there is social assistance.

    So who’s left? Perhaps there’s relatively few caught in between those positions, rather than a whole lot of risk takers and poor folks.

24. 24
    DLA Says:
    June 15th, 2008 at 1:40 pm
    I agree with Anonymous. I think the notion of having an emergency fund is a bit antiquated. Keeping anything over $5,000.00 in a supposedly “high interest” savings account which is actually below the actual rate of inflation is foolish. However, the real issue is managing personal debt (i.e., no high interest rate cards “whether platinum or gold”, accepting the limitations of your buying power and most importantly knowing the difference between need and want). All lessons most of us have had to learn the hard way.