Canadians are generally optimistic about their finances in 2019 with more expecting to add to their savings this year.
A BMO Financial survey found that 15% of respondents added $10,000 or more to their savings in 2018, helping them achieve their financial goals including buying a home.
But a quarter of respondents saved nothing last year and the survey found that rising interest rates are making an impact on household finances.
However, the figures show that Canadian households are taking on less credit due to costs and the B-20 stress test.
“Household credit is now rising the least in 35 years, and with consumers expected to spend at the slowest rate in a decade in 2019 due to higher interest rates and tougher mortgage rules, the debt ratio should stabilize if not fall modestly," noted Sal Guatieri, Senior Economist, BMO Capital Markets. "There's no better time to tighten the fiscal purse strings than when interest rates are on the rise."
Saving for goals, rainy days
Carola Corti, Managing Director, Everyday Banking, BMO Bank of Montreal added that the current environment is putting pressure on finances.
"However, it is encouraging to know that Canadians are coming into 2019 with saving top of mind – it's critically important to prioritize putting money aside, even in smaller amounts," she said.
Of those who said they are planning to dip into their savings this year, almost half are planning a vacation, 20% home renovations, and 15% will spend on seasonal activities such as birthdays.
While 36% say they are saving regularly for an emergency, 4 in 10 say that it’s not enough.
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