Although Canadians tend to think of themselves as frugal, the truth is that we are not as much a nation of savers as we are consumers. In the first quarter of 2010, the personal savings rate was 2.8 per cent, its lowest level since the third quarter of 2008, according to Statistics Canada.
On Tuesday, Scotiabank launched Let the Saving Begin, a new program that it hopes will encourage Canadians to get back on track with their saving habits.
According to a recent Scotiabank study, 94 per cent of Canadians say they feel better when they have a safety net of savings; however, nearly one-third do not have a plan in place to achieve their savings goals.
"Historically, Canadians have had some of the highest savings rates, more than our brethren in the U.S., but now we're falling behind," says Chris Hodgson, group head of Canadian Banking at Scotiabank. "We're on a mission to encourage Canadians to save more of their hard-earned money and we can help."
Scotiabank has recruited television personality Valerie Pringle to embark on a cross-country tour as an ambassador for Let the Saving Begin.
"The issue of financial literacy and financial health is enormously important," Ms. Pringle says. Her goal is to learn about the challenges Canadians face in saving more of their income, as well as to raise awareness of the importance of saving for every stage of life. "Canadians want to save more, but with so many demands on their wallets, they may not always feel it's possible. It's about time that we focus our attention on the critical issue of financial health."
The awareness program will encourage Canadians to focus on three basic principles of saving:
1. Save automatically, because it works. It's simple and painless to set up an account to automatically siphon off a portion of your income and set it aside for savings. "Canadians have told us that an extra $1,500 in annual savings would make a difference in their financial well-being," Mr. Hodgson says. "That's $4 a day. That's something that's manageable that could be put away."
2. Invest for your future, because no one else will. "One of the numbers we're watching closely is that Canadians don't feel they have enough to retire on," Mr. Hodgson says. Canadians need to put in place long-term financial plans and always keep them in sight. The program especially wants to educate young Canadians about saving for their future. If you are a student who has just graduated, it's time to start thinking about a retirement savings plan. "There's that immortality issue. They feel they don't need to put away for retirement at this point," Mr. Hodgson says. "When you look at the compound effect, it's fairly significant."
3. Borrow to get ahead, not fall behind. While taking on debt, such as a mortgage, is an integral part of our lifestyles, it's important to know what your needs are and not take on too much debt, Mr. Hodgson advises. Through the program, Scotiabank hopes to create a discussion around the responsibility that comes with debt and with instruments such as credit cards and mortgages.
As an incentive to save more automatically, Scotiabank is offering customers a "saving bonus." It will match 10 per cent of your savings up to $150 that you accumulate between July 5, 2010, and Oct. 31, 2011. For more details, see the Let the Saving Begin website.