A new poll reveals that Canadian households are planning to save more of their hard-earned money this year, but not for retirement.
The poll, conducted by Pollara for BMO, revealed that Canadians are planning to save an average of $9,859 this year, or about seven percent more than they said they had planned to save last year.
However, the BMO Household Savings Report released Monday, also noted that most of these savings are planned for near- or short-term delights such as vacation, luxury items, entertainment, and hobbies. The report noted that 66 percent of Canadians polled are saving for luxury and fun while only 42 percent are saving for retirement and emergency expenses, which individually ranked as second priorities in the Canadians' savings goal list.
Another item on Canadians' priority list this year is home renovations. Nearly one-third or 29 percent of Canadians surveyed said they are saving for home renovations while only 15 percent said they are saving up for a new home.
Not many Canadians are planning to save up for retirement, according to a recent BMO survey.
Twenty percent of respondents said they are also saving up for a new car.
At the bottom of Canadians' priority list is education with only 19 percent of survey respondents saying that they are saving up for this expense.
Despite these goals, however, the BMO report noted that it is not that easy to achieve these goals. Even though the report noted that the average total savings amongst Canadians is $122,310, only 48 percent of respondent feel that they are saving enough to meet their goals. Respondents said they are challenged by high expenses yet their incomes are low. Some 71 percent of respondents cited high expenses as one of the major challenges they are hurdling even though they have every intention to save up. Others are challenged by low income (65 percent of respondents) and debt repayment (52 percent).
BMO said it is difficult to balance saving up and paying off debts, with the household savings rate at a low of 3.9 percent as of third quarter 2012, according to Statistics Canada.
Said Ernie Johannson, senior vice president, Personal Banking, BMO Bank of Montreal:
"It is sometimes difficult to balance financial priorities and responsibilities with spending on items and experiences we enjoy. However, given the economic realities, it is key that we don't let the nice-to-dos overshadow our must-dos. Having a balanced savings approach allows us to live for today while saving for our future goals."
The BMO report also revealed that men are better in saving up compared to women with savings of $11,631 a year compared to women saving only $8,091.
Asked how they plan to save up to achieve their goals, respondents said they prefer saving in an Registered Retirement Savings Plan (RRSP) or a chequing account (63 percent and 57 percent, respectively).
Forty-nine percent of the survey respondents are also considering the Tax Free Savings Account (TFSA), which has recently been increased to $5,500 this year, as Digital Journal reported earlier. Another 29 percent are considering investing in a high-interest savings account.
A recent BMO report in the Digital Journal noted the preference of Canadians towards TFSAs more than RRSPs.
Only 25 percent said they are considering investing in Guaranteed Investment Certificates (GICs) as savings vehicle to achieve their goals.
Alberatans plan to save almost double than the rest of Canada this year. On the average, Albertans said they would save $18,035, according to a report by Calgary Herald.
In contrast, those in Quebec plan to save only $5,477.
The BMO survey involving 1,000 respondents was conducted between January 10 to January 15, 2013.