Almost half of Canadians reported a decrease in savings due to rising costs.

Postteile: Canadians are losing confidence in their personal finances

23% of Canadians feel less secure about their finances compared to last year

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Canadians are beginning to lose confidence in their personal finances after more than a year of steady optimism. according to the Bank of Montreal’s quarterly Real Financial Progress Index.

The index found that nearly a quarter (23 percent) of Canadians feel less confident about their finances compared to last year. That’s an increase of 18 percent just three months ago.

Most point to the impact of rising inflation on their personal finances.

A majority (61 percent) of consumers said the country’s inflation rate, which hit a new 31-year high of 6.8 percent in April, has had a significant impact on their finances.

“The fastest and most widespread inflation in three decades is forcing Canadian households not only to cut back on necessities like vacations, but also to change how they buy necessities — especially groceries,” Sal Guatieri, BMO’s senior economist, said in a press release.

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Almost half of Canadians (49 percent) reported a decrease in savings due to rising costs.

Housing is still the biggest obstacle for many (37 percent). But monthly bills (up four points to 30 percent) and credit card debt (up two points to 23 percent) are also keeping more Canadians from getting ahead financially than they did last quarter.

The index found that younger generations are particularly vulnerable to reducing their savings. Millennials (62 percent) and Gen Z (56 percent) were the most likely to reduce their savings compared to older generations.

Most (81 percent) Canadians plan to adjust their lifestyle in response to the price jump.

More than half (52 percent) of consumers are tailoring their grocery shopping by buying only the essentials and choosing cheaper alternatives to brand names. Another 52 percent said they eat out less or intentionally shop less when eating out.

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Many (34 percent) drive less to offset rising gas prices. Others (29 percent) cut spending on vacations or cut them out altogether. Some (23 percent) are even canceling their gym and cable subscriptions to cut costs.

However, Canadians seem to prioritize their retirement savings. The index found that a majority are more likely to cut their general savings (36 percent) than their pension contributions (22 percent).

“As the cost of everyday purchases, from groceries to gas, continues to rise across the country, it’s important for consumers to review and adjust their financial plan,” said Gayle Ramsay, head of daily banking and customer growth at BMO, in the press release . “Now is a good time to seek advice from a financial professional on how to navigate this period of high inflation, be prepared for unexpected setbacks and ensure you are on track to reach your financial goals, be it when saving for a down payment or retirement planning.”

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The BMO report recommends postponing large purchases where price increases could be temporary as an additional measure to combat inflation.


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Today’s post was written by Noella Ovid, with additional coverage from The Canadian Press, Thomson Reuters and Bloomberg.

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