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In theory, Canadians have a decent grasp on the basics of money management. In practise, however, it all falls apart.

A poll released Wednesday by RBC indicates that while 57 per cent of Canadians claim to have some sort of household budget, few seem to able to stick to it. Nearly 40 per cent of those polled admitted they are now saving less than they did last year.

The RBC poll comes on the heels of a report last week that showed household debt has hit a record $1.5-trillion, about $176,461 for the average family of four, including mortgage debt. In the report, the Certified General Accountants Association of Canada said about 27 per cent of working Canadians aren't saving any of their earnings.

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The numbers suggest that while Canadians are trying to apply money-management skills, such as budgeting, to their household spending, they are failing in a big way.

Tom Hamza, president of the Investor Education Fund, says the problem stems from a gap between what Canadians know about finances and how they apply that knowledge to their own lives.

The IEF, a non-profit financial literacy agency funded by the Ontario Securities Commission, recently released survey data that include a number of startling results about saving, Mr. Hamza said. Only three out of 10 Ontarians are aware of typical priorities and strategies for long-term saving, the survey shows.

Certain financial concepts are well understood, he said. About two-thirds grasped basic financial and economic principles. However, "knowledge of financial planning and goal-setting is generally so weak that results point to a need for remedial effort across the board," the study said.

While 43 per cent of respondents in the RBC survey said tracking monthly expenses is "very easy," 30 per cent said having the discipline to actually save the money is "very challenging."

Part of the problem is how people go about managing their money, says Maria Contreras, product manager of savings accounts at RBC. Asked how they budget, 23 per cent said they keep track of expenses in their head.

"It's not easy to sit down on a daily or weekly basis and actually track where you're spending every dollar and categorize it and look for opportunities to decrease some of your spending and find ways that you can actually free up some money to save," Ms. Contreras says.

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To budget properly, says Mr. Hamza, you need to go beyond tracking expenses and set some savings goals. "A budget is not a tracker. It needs to be something that directs our behaviour," he said. The IEF website GetSmarterAboutMoney.ca has an extensive section on how to budget effectively.

A report released by CMHC Wednesday suggests all hope is not lost when it comes to how Canadians manage money. It indicates 40 per cent of Canadians with mortgages have increased their payments to pay off their loans sooner. We can only hope that's the same 40 per cent who told RBC they are saving less of their money this year.

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