Dollars & Sense: So Why Are We Not Saving?

There was a report released by the Atlantic Institute for Market Studies that talks about our savings rate (or lack thereof) for the Maritime Provinces. The breakdown of our consumption rate compared to our disposable income is not difficult to visualize as the difference begins with a minus sign. So what does that mean? Basically, we are spending more than we can afford and with that there is nothing left to save.
What the study also outlines is that even though we have had an increase in our available disposable income, savings rates have still dropped. The old adage that as your income goes up, your spending goes up too, holds true in this scenario.
So where are the issues and what can you do different:
Spending, we are consumers of everything. We start our mornings with a drive-thru coffee; have take-out bagels for lunch and pick-up supper on the way home. We need to look at our spending and find the areas where we can and are willing to adjust.  Notice, I use the word adjust; you do not have to cut everything out.
Debt, we are willing to use credit to get what we want. We like the ‘pay later.’ We extend our loans to make them more affordable in our budget, and we take mortgage holidays. Putting payments over longer periods of time limits the available money to use elsewhere. Placing something on a credit card to cover at the end of the month, takes away from the future income earned.
Use of our savings. Savings takes on multiple forms; we have emergency funds, education funds, retirement funds… they have different purposes, yet we intermingle them. For instance, you can ‘borrow’ from your RRSP for a down payment on your home. That is great, however you now need to make up that amount, and you have used your retirement savings. Could there have been a better way?
How can you work toward a savings lifestyle? Start tracking your everyday spending, and when you see something you don’t like, adjust. Stop using credit to acquire things. Make a commitment to use cash for the next thing you want to buy. Start an emergency savings account; this can be your pocket change or an auto-withdrawal from your account.
Stop not following your budget, your budget is there to help you not overspend. Start saving today!