LIVING PAYCHECK TO PAYCHECK?
Well you are not alone. In fact over 30% of Canadians are struggling, big time, according to a Rainy Day Survey by BMO. We see it all the time in our business and suspect that reality is more like 40 to 50 per cent. 27 % have savings that would last only a month or less. 40% have less than $5,000 saved. The majority would likely have to borrow to meet an emergency. Conclusion? Too many Canadians are totally vulnerable to financial collapse and many are already under water, meaning they spend more than they earn.
So what is the ideal emergency fund you ask? The answer is six months of income. How realistic is that for most Canadians? It would appear to be an impossible task right? Further investigation reveals that the answer lies with poor cash flow management, something which most of us know little about.
So how did we get into such a sad state of affairs? Well back in the 1950’s credit cards were non-existent. People could only buy things from savings. Fast forward to the 80’s and 90’s everything changed. The availability of credit and buying things ‘on time’ exploded with easy credit and with most women working, so two incomes instead of one. Look honey we can now afford a bigger home, a cottage, more vacations and a brand new car every four years…lol.
We are encouraged at every turn to consume, consume, consume because it’s good for the economy AND THE BIG BANKS who continue to amass record profits, largely at the expense of consumers who find themselves unable to pay off high interest credit cards, loans and lines of credit, the latter which is the more recent vehicle to dupe us into more debt.
Did you know that Financial Problems are now the number one reason, ahead of infidelity, for divorce. Yes it’s true!
You are a good person, you are honest and you work hard but you can’t make ends meet. If you are at the financial brink or feeling you are about to crash, please do not despair.
There is a total answer that we will reveal in next week’s article. It is not Debt