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Canadians Resolve to Better Manage Their Finances in 2013: RBC Canadian Consumer Outlook
- Resolutions for New Year include spending less, saving/investing more
- National overall index rises 12 basis points from 2011
TORONTO, November 27, 2012 - Heading into 2013, more (37 per cent) Canadian consumers feel their personal financial situation will improve than they did at this same time last year (32 per cent) and they are taking steps to be in better financial shape, according to the quarterly RBC Canadian Consumer Outlook (RBC CCO).
Looking ahead, one-in-three Canadians (31 per cent) are planning to focus on reducing their debt, 26 per cent on spending less, 25 per cent on saving or investing more, and another 20 per cent intend to take all of these actions in 2013. Canadians are also sending out a strong signal that less money will be going toward major purchases in 2013, with 44 per cent reporting they will spend less on big ticket items such as cars, household appliances or vacations. This is consistent with findings released earlier this month that Canadians intend to be more frugal this holiday season and that managing their debt is a key priority.
"Canadians may believe brighter days are ahead because they are making resolutions to better manage their finances by reducing debt and curbing spending not because of their outlook on the Canadian economy," said Richard Goyder, vice-president of personal lending, RBC. "While New Year's resolutions may start with great intentions and fizzle out later in the year, setting out a plan to reduce your debt, keep it under control and save more for that rainy day will help keep you on track."
The most recent Economic and Fiscal Update issued by the federal government in November estimated that Canada's real GDP will grow by 2.0 per cent in 2013. RBC Economics is currently forecasting the Canadian economy will grow by 2.4 per cent in 2013 and will be releasing its next Economic and Financial Outlook in December.
"The Canadian economy has been growing at a rate close to its long-run potential," noted Craig Wright, senior vice-president and chief economist, RBC. "However, we will have a sharper picture of Canada's future growth prospects when the U.S. addresses the fiscal cliff and European policymakers can move the Eurozone out of recession and address fiscal and financial market imbalances."
The RBC CCO is Canada's most comprehensive consumer assessment of the economy, personal financial situation and economic and purchasing expectations. Benchmarked at a baseline of 100 in November 2009, the national overall RBC CCO Index rose to 82 in October 2012, up 12 basis points from this time last year and two points higher than the previous quarter. Highlights from the RBC CCO, Top 10 Financial Tune-up Tips for 2013 and Online Money Management Resources follow below.
Top 10 Financial Tune-up Tips for 2013
- Reduce your debt: If you are among the 31 per
cent of Canadians who plan to focus on reducing debt next
year, you can start off by paying down debts which have
the highest interest charges first.
- Consolidate your debt: To make all your debts
easier to manage and pay down, talk to a financial advisor
about consolidating your debts. Combining multiple payments
into one loan can help make it easier to manage your debt
and you may even reduce your interest costs and be able
to pay down your debt sooner.
- Budget for the year ahead: Having your own budget
allows you to manage your expenses, pay down debts and save
for future goals. If you don't have a budget, set one up
for the new year; if you already have one, the beginning
of a new year is a good time to do a budget review. You
can get in-person budgeting advice any time of the year
from a financial planner at your local bank branch; there
are also online resources to help you get started (see "Online
Money Management Resources" further below).
- Make your credit card work for you: Credit cards
can help you keep track of your expenses and also earn valuable
rewards more quickly, but whenever you use your credit cards,
do so wisely - pay off your full balance before the due
date each month.
- Have an emergency fund: Unexpected expenses can
catch you off-guard throughout the year. An emergency fund
can help you take care of unplanned costs without straining
your budget.
- Compare loans to lines of credit: If you are planning
a major expense in the new year (buying a car, renovating
your home, investing in your RRSP), explore whether a loan
or a line of credit will work best to help you manage that
expense (see "Online Money Management
Resources" further below).
- About to buy a home? Get pre-approved for a mortgage:
To get a better idea of your price range before you buy
your first home, apply for a pre-approved for a mortgage,
with professional advice that will help you understand the
long term costs and choose the right mortgage option to
suit your needs.
- Review your investments: The start of any new
year is a good time to review the mix of assets in your
investment portfolio and to recheck your risk profile, to
see if you need to make any adjustments.
- Use all your income tax deductions: Remember to
pay all tuition fees, investment management fees, accounting
and legal fees if deductible, safe deposit box fees, childcare
expenses, alimony, medical expenses and any business expenses
by December 31 of the year, if you want to deduct them on
that year's tax return.
- Individual Pension Plan option for business owners:
If you are a business owner with an incorporated company,
you may find both year-end corporate income tax deductions
and a structured retirement savings plan for yourself through
an Individual Pension Plan (IPP).
Online Money Management Resources
- Debt management
- Investing
- Financial
planning
- Emergency
fund planning
- Credit cards/Rewards
- Loans/Lines
of credit
- Homebuying
- Taxes
About RBC financial advice and interactive
tools
Canadians can access RBC
Financial Planning and rbc.com/savingsspot
for free planning, budgeting and savings advice and resources,
or to find the nearest Investment
and Retirement Planner. In addition, Canadians who want
to get more from their day-to-day banking, protect what's
important, save and invest, borrow with confidence or take
care of their businesses, the RBC
Advice Centre can help answer
their questions. Interactive tools and calculators such as
the Debt
Reduction Plan and Debt
Consolidation Calculator, provide customized information
covering many facets of personal finance. All personal RBC
online
banking clients also can use myFinanceTracker,
a no-cost interactive financial management tool, to create
a set budget, track their spending habits and access tax-related
apps in myTax
Centre, to help manage and plan their taxes.
About the RBC Canadian Consumer Outlook
Index (RBC CCO)
Benchmarked as of November 2009 to a baseline of 100, the
RBC CCO is conducted online via Ipsos Reid's national I-Say
Consumer Panel to 3,375 Canadians (540 British Columbia, 540
Alberta, 469 Saskatchewan/Manitoba, 735 Ontario, 609 Quebec,
482 Atlantic Canada). Weighting is then employed to balance
demographics and ensure that the sample's composition reflects
that of the adult population according to Census data and
to provide results intended to approximate the sample universe.
Data collection was October 1 to 10, 2012. The precision of
Ipsos Reid polls are calculated using a credibility interval.
In this case, the poll is accurate to within ±1.9 percentage
points of the entire Canadian population.
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For more information, please contact:
Suzanne Willers,
RBC Corporate Communications, 416-974-2727
Kathy Bevan, RBC
Corporate Communications, 416-974-8820
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