This tweet set me off this morning and caused me to dig up some of my research on Canadian household debt and compile it in a post:
@liberal_party RT @I_LuvTO: @scottbrison What's Cdn gov doing to help Cdns save more money & not be in debt?
What's the Government doing to help Canadians?!?
First of all, why is it the Government's responsibility to help Canadians save more money and get out of debt? Do we need coddling now that we've thrown basic money principles (such as spend less than what you earn) out the window?
Second, I believe the Government has helped. Here's a brief snapshot:
- Registered Retirement Savings Plans (RRSPs) - 1957
- Canada Pension Plan (CPP) - 1965
- Universal Health Care - 1966
- Tax Free Savings Accounts - 2009
- Code of Conduct for Credit Cards - 2010
- New mortgage rules - 2008-2011
Oh sure, there's always more that can be done and we'll let the politicians dream up ways to make Canada an even better place to live and retire; everyone can participate in this dialogue as well and you can read more in Canada's Economic Action Plan (tackles issues such as tax relief, unemployment, infrastructure and strengthening the financial system). Thanks to measures that are in place in our country:
"Canada’s financial system has shown exceptional stability throughout the global financial crisis, with its banking system being recognized as the soundest in the world. For the third year in a row, the World Economic Forum has ranked Canada 1st out of over 130 countries on its “soundness of banks” criteria."1
 World Economic Forum, The Global Competitiveness Report, 2010–11
Is there a problem with debt and saving enough to support oneself in retirement? Absolutely. The news is always full of headlines about our total public debt load ($565 billion dollars), our consumer debt (average $26,000), our spending (on average, Canadians owe 147% of their income) and our mortgages (almost half of boomers still have one).
StatsCan "Perspectives" offers some interesting insight into North American debt. The tipping point seems to have happened in 2003 when average debt surpassed average income. Gone are the days when Gramma saved up for a new washing machine and then bought it. With cash. Now, you just throw it on the credit card or (cringe) buy it with no money down or interest for six months. A better strategy (as my father says) is the old Scottish credit plan: "100% down, no payments". When it comes to housing - we're doing the same dangerous thing: 5% (or 0%) down and amortized over the longest period possible - meaning many people will still be paying a mortgage at 65 (or renting...see the rent vs. own post).
What can we do? Well, your financial advisor (don't have one? Get one, even if it's just a friend/acquaintance you share notes/research with and hold each other accountable) recommends having a plan. That means: how will you save enough for later while still covering expenses now? And what happens if something disrupts your plan? The basics:
- Have a plan (how much money do you need to achieve your goals?)
- Protect your income and assets (with insurance)
- Spend less than you make
- Pay yourself first (contribute to your company's Group RRSP or have an auto-payment to your individual RRSP on pay day, then pay your bills and the remainder is for food, entertainment, etc.)
For the majority of employed Canadians, it's really this easy. And if more people stuck to the basics, we wouldn't be asking questions like "What's Cdn gov doing to help Cdns save more money & not be in debt?".