Personal Finance

Why Canadians find saving so hard — and how to get better at it ASAP

A new study says we’re particularly bad at saving, so we enlisted an expert for help.

A new study says we’re particularly bad at saving, so we enlisted an expert for help

According to a new analysis of numbers from the Organisation for Economic Co-operation and Development from personal finance comparison website, Canadians are forecast to save just 3.21 per cent of their disposable income in 2020, or about $1,277 on average per household. This places us in the bottom half of OECD member countries, behind Ireland, Slovenia and the United States, where Americans are predicted to save more than triple that amount.

"Canadians are currently spending more of their income to service their debts than Americans, which partly explains the lower savings rate," says Sal Guatieri, a senior economist at BMO Capital Markets. But our money isn't just going toward our debt.

"Savings is taking a hit because the cost of living is going up," says certified financial planner Shannon Lee Simmons.

In the more than ten years that Simmons has been advising clients on their finances, she's seen the amount of money Canadians are able to put away every month decrease for a number of reasons including stagnating wages and the rising price of necessities like gas, groceries, daycare and housing.

Simmons says housing used to account for around 30 to 35 per cent of people's take-home pay and even less for renters. Now, because wages aren't keeping pace with housing costs, that amount has grown to 45 or 50 per cent for some households.

Keeping up with the @Joneses

"We also have this really intense pressure to spend that I just didn't see five-plus years ago," Simmons adds. "And then we don't tend to say no to those things that we can't afford."

Simmons says this is partially driven by changing expectations of what daily life is supposed to cost and what we're supposed to provide for our families. For example, she cites the increasing popularity of home renovations and the plethora of children's extracurricular activities available today.

"Social media has a lot to do with it. We look at how other people are living that are in our same peer group, and we think, 'Well, maybe I should be doing that, too, because I don't want to fall behind.'"

The result of this spending is visible in Canada's household debt to income ratio which, according to, has been rising since the 2008 financial crisis.

The majority of Canadians aged 20 and over admit to making money mistakes, whether it's overspending on lifestyle or making a bad investment. But Simmons says that not being able to save the benchmark 10 per cent of your pre-tax income doesn't mean you're a financial failure.

Something is still better than nothing

Simmons doesn't promote a set amount her clients should be saving because it implies that anything less is not worth striving for. "I would rather someone save a little bit than just give up altogether because they feel like the goal is too unrealistic."

Instead, she says, you should use that benchmark as a catalyst to examine why you're not reaching your savings goals and make changes accordingly.

Simmons says the first thing to do is to figure out what you can and can't afford to save by mapping out your money.

One tool that can help people who are struggling to figure out how much they can afford to save is Thrive Savings, a Canadian app that connects to your bank account and uses artificial intelligence to evaluate your bills and spending habits, determine what you're able to save, and automatically put that money toward pre-set goals like a vacation or emergency fund.

According to Thrive founder and CEO Jordan Wimmer, 65 per cent of Thrive's users identify as working part-time, freelance or on demand — a community that's not always able to take advantage of typical automatic savings plans.

Wimmer says that "even at small amounts, Thrive shows users that, yes, they can actually save money, which in turn further empowers the user to save even more." She says 50 per cent of Thrive users ask to increase their savings rates after one month of using the service and save $80 per month on average.

Honing your financial focus

Once you've figured out what you are able to save, Simmons encourages prioritizing based on where you'll get the biggest bang for your buck. For example, if you have high-interest debt, focus on paying that down first. Then you can start to look at building an emergency savings account, saving for a house or putting some money away for retirement.

Other apps that can help you save with minimal effort include Money Box, which, like Thrive, allows you to set savings goals, make contributions and track your progress. If you want to invest the money you're saving, Mylo and Wealthsimple have apps that connect to your debit and credit cards to round up your purchases and put that money into an investment account.

Simmons recommends having two chequing accounts: one for fixed expenses like rent, phone and car payments, and a second for discretionary spending. If you only spend money from your discretionary account, you don't have to worry about budgeting, she says. She suggests using a banking app to check in on your balance regularly to stay aware of where you're at. Experts also agree that comparison shopping when opening a bank account or getting a credit card can help you save on fees and interest rates.

Lastly, Simmons recommends seeking unbiased and individualized financial advice from someone who isn't trying to sell you insurance or investment products. This can help you sort out your financial goals and priorities, and provide you with strategies that fit your specific needs.

"Life is long, and there are periods of time where you're able to save and there are periods of time where sometimes just breaking even is the goal," says Simmons. Whether it's starting a business or paying for daycare, its normal to experience ebbs and flows in savings patterns. "The problem is when you're never in one of the upticks."

Eva Voinigescu is a freelance journalist and producer. She writes about health and science, careers, and culture.