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In this padlet, the costs and financial aspects of living on your own will be evaluated. You will learn about the costs of living in various cities including Toronto, how to budget and build a financial foundation for you future, different perspectives on how to save money (minimalist lifestyle, living on minimum wage), financial tips for living on your own, government statistics related to money and budgeting, and finally, the breakdown of the costs of living on your own and fees you may not expect.

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This is a video that explains how to manage your money by using the 20/30/50 rule and I feel like this could be a useful tool for budgeting your money when living on your own. This rule breaks down how to effectively manage your money and designating it to certain areas of your life and knowing where your money is going. By 20/30/50, this means that you should set aside 20% of your net income to savings/debt (retirement, loans, credit cards, emergency fund [6-12 months of living expenses], etc.), 30% to wants (recreation, shopping, Netflix, subscriptions, dining out, hobbies, etc.) and the remaining 50% to needs such as housing, food, utilities, insurance, etc. It explains how creating a budget can help you keep track of your money and allow you to save for the future. It also stresses creating an emergency fund so if something devastating or unforeseen happened you are prepared.

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How To Manage Your Money (50/30/20 Rule)

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This image outlines the expenses of living on your own and how it is more than just paying rent by outlining other expenses that are involved.  I chose this image to illustrate that living on your own comes with expenses you may not think about till you are on your own which include electricity, utilities, cable/telephone/internet, renters insurance, security monitoring, parking, households items, etc. which can all add up in cost and need to be accounted for to ensure you are able to support yourself and are able to afford it.

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This is a video from 2019 and the woman in the video is a resident of Toronto and breaks down the cost of living in Toronto, Canada's biggest city.  It is about a year old so the values may be a little different now but she concluded that the average cost of living in Toronto for her was 1900-2200 a month. She explained that the average rent price in Toronto is 2200 a month but since she has found strategies to lower her monthly costs, her cost of living has become much cheaper.  She has lived in Toronto for quite a few years so her rent was only $1300 because of rent control, her rent can not go up drastically by law but the same place for a new resident could cost much more, so she has gotten lucky and has cheap rent because of that. She broke down the cost of her phone and Wi-Fi ($140/month), groceries ($280/month),  Transit ($160 /month for transit pass), eating out and entertainment ($300/ month due to living in a very busy city with lots of diversity),  business expenses ($100/month) and other ($300/month) which totaled to $1900-2200/month. She also gave tips for living a cheaper lifestyle and some of them included biking or using transit instead of using a vehicle,  living with roommates, instead of going out go for a walk and enjoy nature, and grocery shopping at farmers markets and meal prepping. She finished off the video by explaining that to buy a house in Toronto is very costly and the best option for her right now is renting as in order to buy a house she would have to earn a minimum of $5000 a month. I chose this video because it relates to a city that is local, but it also shows how much more expensive it can be to choose to live in a big city. I also thought that this video was important to share because it analyzed her personal monthly costs of living while also providing tips on how to make city living cheaper.

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Cost Of Living In Toronto As A Millennial | My Monthly Expenses

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This is an article written by an app called MINT.  It explains that there are tons of apps that can helped with budgeting and managing your finances. Mint is one of the apps and by using it you can save money by sticking to a realistic budget. It explains how many individuals make the mistake of not creating a budget when they move out and this can cause them to run out of money and put themselves in debt especially when they are not contributing to their savings. The article expresses how the MINT app is an easy to use app that categorizes all of your expenses and shows you where you are financially standing at any time. I chose this article because it is another option for people who have a hard time budgeting, it outlines questions you should ask yourself before moving out, how to create a budget and the categories, and money saving tips to help you live comfortably on your own.

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If you can't wait to move out of your parents' home and start living on your own, you're not alone. Independence is amazing, but enjoying that newfound freedom can be more expensive than you might think. Fortunately, there are tons of helpful websites and mobile apps that can make managing your finances fun. And by incorporating these tools in your everyday life, you can develop a realistic budget and start saving money for the things you enjoy.

If you've been asking yourself "How much money do I need to move out?" here are a few tips to help you start adulting like you've been at it for years.

Common Mistakes When Moving Out for the First Time

Perhaps the biggest mistake young adults make when moving into their first apartment is not making a budget. The principle is simple: First find out how much income you're earning each month, and determine how much you're spending and on what. Then, based on those numbers, set aside a certain amount of each paycheck for rent and utilities, and actively track your spending so you don't run out of cash.

Budgeting apps like Mint automatically import and categorize your expenses (like how much you spend on fast food and concert tickets each month), giving you a bird's-eye view of your financial standing in seconds. You can also use a notebook or spreadsheet to track your spending if you prefer to kick it old-school. The point is, creating and sticking to a monthly budget is the single best thing you can do to prevent a financial catastrophe. It might even be among the most valuable life skills you'll ever develop.

Another big mistake young adults make when first moving out of Mom and Dad's is not saving any money. You might wonder what the point of saving is if you only have a handful of dimes left over from each paycheck. But even saving just $5 a week is better than not saving at all. And you'll definitely thank yourself for having stashed away that cash when your car starts making weird noises or if you sprain your ankle at a music festival.

Paying bills late is also common among the newly independent. Avoid this nasty habit by setting up reminders on your smartphone or using an online calendar to alert you a few days before bills are due. Or, better yet, start paying your bills as soon as they arrive. Not only are late-fees crazy expensive, but if you regularly miss due dates, you could be crippling your credit score. Paying a bill late, even if only by a day or two, makes it more expensive to borrow money when you want to finance a car, house or some other major purchase. Look out for your future self by paying your bills promptly.

Preparing for Expenses You Hadn't Considered

In order for a budget to work, it has to account for everything you spend money on. This includes little things like parking lot fees, late-night drive-thru meals and random convenience-store purchases. Like to rent movies on the weekend? Add it to your budget. Tend to drop a few bucks on mobile apps or lotto tickets each month? Include those as well.

Those living away from home for the first time are bound to face a flurry of unexpected expenses during their initial months of independence. In the kitchen alone, you'll likely need to invest in dishes, cookware, and a dozen ingredients to stock your pantry. And when it comes to keeping your home looking good, it's easy to underestimate the cost of cleaning supplies. Netflix and Spotify subscriptions are also often overlooked, as are annual bills like vehicle registration and tax preparation. To create a realistic budget, you should first spend some serious time looking at last year's expenses to make sure you're not missing anything.

Money-Saving Tips for Moving Out at 18

Here are a few basic ways to cut back on expenses during your first years of independence.

1. Don Your Chef's Hat

Cooking your own meals on a daily basis can save you more money than just about any other change in your behavior. Knowing how to make five basic meals (say, chili, tacos, chicken and vegetables, spaghetti with marinara sauce, and a slow-cooked roast with veggies), and having a microwave handy for reheating leftovers, can cut your food expenses in half. An added bonus: Homemade food is almost always healthier than prepared meals.

2. Kill Some Kilowatt Hours

Get into the habit of turning off-or even unplugging-lights, appliances and electronics when you aren't using them. And consider getting a programmable thermostat to keep heating and cooling costs down.

3. Quit Using Credit

Only carry one credit card, and commit to only using it in absolute emergencies. Using cash or a debit card for day-to-day expenses prevents you from overspending and accruing budget-busting interest charges.

4. Explore Other Avenues

Consider all your transportation options. Do you really need to drive everywhere, particularly if you have to pay for parking once you get there? And with Uber, Lyft, Car2Go and other ride-sharing services now widely available, city dwellers might even consider ditching their cars completely. The cheapest gallon of gas is the one you don't use.

Things to Include in Your First Budget

Show Mom and Dad you know how to move out the smart way by creating a monthly budget and sticking to it. Here are some items you'll probably want to include.

Rent: most likely your largest single expense

Utilities: electricity, gas, water, cable TV, internet, etc.

Meals: supermarkets, restaurants, drive-thrus and delivery

Transportation: flights, cab rides, fuel, auto insurance, vehicle registration, etc.

Medical: prescription drugs, co-pays, etc.

Entertainment: date nights, impromptu adventures, vacations

Clothing and toiletries: new threads, soaps, shampoos, shaving cream, etc.

Subscriptions and memberships: gym, magazines, online movie or music services

Gifts: birthdays, weddings, baby showers and holidays

Pet Care: annual checkups, flea medicine

You Need a Financial Cushion

A good rule of thumb you might've heard is, in the event of an emergency, everyone should have a financial cushion substantial enough to cover three- to six-months of living expenses. And while there's no arguing the soundness of that advice, many people think that's simply not possible and they don't even bother trying.

But even if you don't have half a year's salary chilling in your bank account, having some money set aside is better than none. There are countless ways to work toward building an emergency savings account, from setting aside loose change at the end of every day and depositing it in the bank at the end of the month, to having a percentage of your paycheck automatically stashed away in your savings account. Many first-timers use the simple 50/20/30 rule of budgeting to ensure a balanced bank account. Start now, and even if you only save a few dollars a week, it will add up over time, and help you avoid financial hardship later on.

Learning how to make a budget isn't the most exciting thing you'll do when first moving out and living on your own, but it can mean the difference between just getting by and making the most of your money.

Not using Mint yet? Download our free app today and you'll be budgeting like a boss before you know it.

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How to Move Out for the First Time: Budgeting for Living On Your Own | MintLife Blog

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If you can't wait to move out of your parents' home and start living on your own, you're not alone. Independence is amazing, but enjoying that newfound freedom can be more expensive than you might think. Fortunately, there are tons of helpful websites and mobile apps that can make managing your finances fun.

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This was an interesting video because it explains the realities of many individuals who live alone and the fact that the majority (8 out of 10) live paycheck to paycheck. The man who created the video explains how he got himself into $97,000 worth of debt through purchasing a new car and gaining school loan debt. He kept gaining debt and relized he was in trouble and needed to make a change in his spending habits. After 4 years he was able to pay it all off and become debt free by changing his mindset. He stressed living a minimalist life and gave some financial tips such as reading financial books as they have lots of value and are a good learning resource, creating positive habits and maintaining a healthy relationship with your money. The biggest message that was emphasized was to always spend less money than you make and to stop making excuses to buy things and feeling pressure to buy what’s new because of social media. Don’t spend and upgrade just because you get a promotion and to stay mindful of your spending while keeping your lifestyle in line. By staying mindful this provides financial safety and security in the long run and allows you to live more comfortably. It explains how if you change your mindset from needing the newest items and upgrades to needing to live debt free and not ay check to paycheck it can help a lot.  I chose this because it relates to students and he talks about money, modern problems with it and how living a minimalist lifestyle can help you.

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A Minimalist Approach to Personal Finance

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This image demonstrated steps that young people can take to build a financial foundation and eventually get some sort of financial freedom by building good habits and spending within your means and what you can afford. All of the suggested tips are valid as it mentions creating a budget and building an emergency fund which can assist you in understanding your spending habits and if you can afford to invest.  It mentions paying your bills on time and not avoiding payments to allow you to build a good credit score, and it mentions to use credit wisely to also keep a good credit rating. Finally, it reminds young people 4not to forget about saving for retirement as this is also a very important aspect which should be taken into consideration and you should always be thinking about finances for the future

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This is not necessarily a breakdown of expenses for moving out on your own, but it is statistical data from the Government of Canada in 2019 which outlines the behavior of Canadians and their money management skills. It determined that 7 out of 10 people prepare for their retirement in their financial goals. It also observed that 2/3 of Canadians have a sufficient emergency fund if they needed it. Further on in the article, there are graphs which demonstrate the % and type of debt people hold, the amount people owe on their mortgages, reasons that people use credit cards,  % of people struggling to manage their cash flow and pay their bills, the number of people who experienced scams and financial fraud,  how many people actively budget and how they do it, how people plan to pay for their school, and more. I included this website because I found this to be very interesting, it was very eye-opening to see the number of people that live in debt although it is understandable because the majority of debt came from mortgages and home improvement. This article and these statistics also showed the importance of budgeting and setting financial goals to maintain a positive cash flow and be able to comfortably afford to live on your own.

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The dataset for the 2019 Canadian Financial Capability Survey is available upon request: Data Request Form.

Executive summary

This report highlights results from the 2019 Canadian Financial Capability Survey (CFCS). The CFCS is designed to shed light on Canadians' knowledge, abilities and behaviours as they relate to making financial decisions ( Keown, 2011; FCAC, 2015). A key objective is to assess how Canadians are doing on indicators of financial well-being and inform ongoing efforts aimed at strengthening their financial literacy. This includes learning what Canadians know about the financial services available to them and understanding their approaches to financial planning (day-to-day money management, budgeting and longer-term money management), their plans for the future, and how they perceive their financial situations. The CFCS is a cross-sectional survey that has been conducted on a 5-year cycle, with previous versions fielded in 2014 and 2009.Footnote 1

Canadians are facing financial pressures managing their debts and day-to-day finances

On average, Canadian household debt represented 177% of disposable income in 2019, up from 168% in 2018 ( Statistics Canada, 2019). Results from the 2019 survey indicate that nearly three quarters of Canadians (73.2%) have some type of outstanding debt or used a payday loan at some point over the past 12 months (see also Statistics Canada, 2017). Almost one third (31%) believe they have too much debt.

A mortgage is the most common and significant type of debt held by Canadians. Overall, about 40% have a mortgage; the median amount is $200,000. From a life course perspective, virtually all homeowners will have a mortgage at some point in their life; almost 9 in 10 Canadian homeowners aged 25 to 44 (88%) have mortgages. On top of this, about 13% of Canadians have an outstanding balance on a home equity line of credit (HELOC) attached to their primary residence. For those with an outstanding balance on their HELOC, the median amount outstanding is $30,000. Other common types of debt include balances owing on credit cards (held by 29% of Canadians), vehicle loans or leases (28%), personal lines of credit (20%) and student loans (11%). Less common types of debt include mortgages for a secondary residence, rental property, business or vacation home (5%) or a personal loan (3%).

Finally, there is evidence that a growing share of Canadians are under increasing financial stress. While the majority of Canadians (65%) are keeping up with bills and payments, a growing share are facing financial pressures.

In particular, persons under age 65 are much more likely to be struggling to meet their financial commitments (39% vs. 22% for those aged 65 and older). Over the past 12 months, 8% of Canadians said they are falling behind on their bills and other financial commitments, up from 2% in 2014. Individuals who are under the age of 65 or have household incomes under $40,000 are more likely to feel they are falling behind on their bill payments and other financial commitments. Family circumstances are also important: lone parents or individuals who are separated or divorced are more likely to report falling behind. There is no significant difference between men and women.

In terms of managing monthly cashflow, about 1 in 6 Canadians (17%) say their monthly spending exceeds their income, while 1 in 4 (27%) say they borrow to buy food or pay for daily expenses. Again, persons under the age of 65 and those with household incomes under $40,000 are among those more likely to run short of money or say their monthly spending exceeds their income. In addition, separated or divorced persons or lone parents are more likely to report borrowing money to cover day-to-day expenses.

Budgeting is crucial for many Canadians in managing their day-to-day finances, keeping on track with bill payments, and paying down debt

For many Canadians, creating and maintaining a budget is one of the most important first steps in managing their money. About half (49%) of Canadians report having a budget, up from 46% in 2014 ( FCAC, 2015). The most common method of budgeting is using a digital tool, such as a spreadsheet, mobile app or other financial software (20%). This is followed by using a traditional approach, such as writing the budget out by hand or using jars or envelopes (14%). Evidence from the 2019 CFCS indicates that another 1 in 6 Canadians (17%) could benefit from having a budget. These individuals cite a wide range of reasons for not budgeting, such as not having enough time or finding it boring (9%) or feeling overwhelmed about managing money (6%). Others say they are not responsible for financial matters in their household or prefer not to know about their finances (4%), or that they do not know or prefer not to say (5%). These time-crunched and overwhelmed non-budgeters experience considerable challenges in managing their money.

Compared with non-budgeters who are time-crunched or feel overwhelmed, Canadians who budget are less likely to be falling behind on their financial commitments (8% vs. 16%). Budgeters demonstrate more effective management of their monthly cash flow: they are less likely to spend more than their monthly income (18% vs. 29%) or to need to borrow for day-to-day expenses because they are short of money (31% vs. 42%). Interestingly, Canadians who use digital tools for budgeting are among the most likely to keep on top of their bill payments and monthly cashflow. In addition, compared with Canadians who feel too time-crunched or overwhelmed to budget, those who budget are 10 percentage points more likely to be taking actions to pay their mortgages (35% vs. 24%) and other debts (57% vs. 47%) down more quickly.

Having a budget or financial plan is an effective way to start saving toward future goals and to prepare for unexpected expenses

Many Canadians are taking steps to prepare financially for their futures, including planning for retirement, saving for shorter-term financial goals, and preparing for unexpected life events and expenses.

Retirement savings

About 7 in 10 Canadians who are not yet retired (69%) are preparing financially for retirement, either on their own or through a workplace pension plan. This is up slightly from 66% in 2014 ( FCAC, 2015). Interestingly, this may reflect the fact that over the past 5 years, Canadians have become increasingly aware of the need to save for retirement. For example, almost half of Canadians (47%) say they know how much they need to save to maintain their standard of living in retirement-an increase of 10 percentage points since 2014 (37%). Not surprisingly, Canadians who have a plan to save are more confident that they know how much they need to save for retirement (56% vs. 28%) and that their savings will provide the standard of living they hope for (71% vs. 32%), compared with those who do not have a plan for retirement. In fact, Canadians' anxiety about retirement is heavily concentrated among those who do not yet have a plan to save for retirement. These individuals are more likely to rely mainly on public pension benefits, such as Old Age Security or the Canada Pension Plan (or the Québec Pension Plan).

Other financial goals

Setting shorter-term financial goals is another important step in building an effective financial plan and managing money well. Interestingly, about two thirds of Canadians (66%) are planning some type of major purchase or expenditure within the next 3 years, such as buying a home or condo as a principal residence (11%), embarking on a home improvement or repair (17%), taking a vacation (14%) or purchasing a vehicle (13%). Having a budget can help put in place a plan for how to afford these types of financial goals. Only 6% of budgeters do not have a plan for how they are going to pay for their next major purchase, compared with almost 15% of those who feel too time-crunched or overwhelmed to budget.

Planning ahead for education

One of the first major financial decisions that many younger Canadians must wrestle with is how they will afford post-secondary education, whether that means technical or vocational training, a community college program or a university degree. Almost one quarter of Canadians aged 18 to 24 (23%) cited their education as the main expenditure they were planning within the next 3 years, making it the most common response for this age group. The median cost is estimated at $20,000 to $29,999, although the amount likely depends on the length and type of program.

Among Canadians who are planning post-secondary education in the next 3 years, almost half (47%) anticipate using mostly savings to pay for their education, while 40% expect to borrow at least a portion and 12% do not yet have a plan.

Half of Canadians aged 18 to 24 (50%) currently have student loans. The proportion with an outstanding balance on their student loan declines with age, to about 36% for those aged 25 to 29 and 21% for those aged 30 to 34. After age 35, only about 5% of Canadians have an outstanding balance on a student loan. For Canadians under age 35, those with a budget are less likely to have an outstanding student loan compared with those who feel too time-crunched or overwhelmed to budget (29% vs. 36%).

Emergency fund

Two thirds of Canadians (64%) have an emergency fund sufficient to cover 3 months' worth of expenses. A similar share (65%) are confident that they could come up with $2,000 if needed in the next month.

In general, Canadians who have household incomes of at least $40,000 and persons who have paid off the mortgage on their principal residence are more likely to have an emergency fund and be confident that they could come up with $2,000 to cover an unexpected expense. Seniors aged 65 and older and individuals who are married or widowed are also more likely to have an emergency fund and be able to cover an unexpected expense. In contrast, individuals who are living with a common-law partner, separated, divorced or single (never married) are less likely to have emergency funds or be able to cover an unexpected expense of $2,000, especially if they are lone parents. Women are less confident that they would be able to cover an unexpected expense of $2,000.

For those who still need to build an emergency fund or establish a regular habit of saving, having a budget can be an effective first step. For example, more than 6 in 10 budgeters (65%) have emergency savings compared with only 4 in 10 persons (39%) who feel too time-crunched or overwhelmed to budget. Moreover, about 61% of budgeters indicated that they would be able to come up with $2,000 to cover an unexpected expense compared with only 46% of persons who feel too time-crunched or overwhelmed to budget.

Strengthening financial literacy through financial advice and financial education

In Canada, there are myriad avenues Canadians can pursue to seek advice on topics like retirement planning, tax, insurance, debt management and general financial knowledge. Canadians frequently get their financial advice from multiple sources. About half seek financial advice from a professional financial advisor or planner (49%), followed by banks (41%) and friends or family members (39%). Canadians also conduct Internet research (33%), read newspapers and magazines (15%), and get advice from radio or television programs (10%).Footnote 2

Overall, Canadians between the ages of 18 and 34 years are more likely to ask friends or family members (59%) or use the Internet (51%). In contrast, Canadians aged 65 and older are more likely to seek advice from a financial advisor or planner (51%) or a bank (41%). Those in this older age group are much less likely to look for financial advice on the Internet (13%).

A considerable portion of Canadians (41%) say they sought advice on a specific subject area or financial product at some point during the past 12 months-most commonly about general financial planning (24%). This was followed by retirement planning (19%), insurance (12%) and tax planning (11%). Less common subjects for financial advice included estate planning (7%) and planning for children's education (6%), likely due at least in part to the fact that these topics are more relevant during specific life stages.

On top of seeking financial advice, almost half of Canadians (44%) engaged in some type of financial education to strengthen their financial knowledge over the past 5 years, most commonly by reading a book or other printed material (22%), consulting online resources (16%), or taking financial courses at work (9%). Less commonly, Canadians took other in-person courses at a school (7%) or through a not-for-profit or community organization (5%).

Interestingly, there are considerable differences in the likelihood and the preferred methods of financial learning for different age groups. More than half of Canadians aged 18 to 34 (56%) have taken steps to strengthen their financial knowledge, mainly through online study (26%) or learning at work or in school (24%). In contrast, only one third of Canadians aged 65 or older engaged in financial learning over the past 5 years (32%). Seventeen percent of seniors did so by reading a book or other printed materials. Only 7% of persons in this age group participated in online financial learning.

Estate planning, powers of attorney, credit reports, financial fraud and scams

It is critical that Canadians strengthen their financial knowledge, skills and confidence because financial decisions are important throughout (and sometimes even beyond) their lifetimes. This includes estate planning and setting up powers of attorney. Financial education is also important to help Canadians protect themselves from financial fraud and scams.

In terms of estate planning, about half of Canadians (55%) have a will and 40% have powers of attorney drawn up. For Canadians under age 35, the challenge seems to be creating an estate plan in the first place, since only 22% have a will and only 9% have drawn up powers of attorney. Addressing this financial gap is especially important for those who have children or other financial dependents. For Canadians aged 65 and older, the bigger challenge may be ensuring that their estate plan is up to date. While the overwhelming majority of Canadians aged 65 and older have wills (95%) and have designated powers of attorney (68%), more than half have not updated their wills (53%) or powers of attorney (57%) in the last 5 years. This is a concern because some may have a will or power of attorney that no longer reflects their wishes.

All individuals are at risk of being victimized by fraud or financial scam, so it is important that Canadians are aware of these risks and know how to protect themselves. More than 1 in 5 Canadians (22%) report being a victim of financial fraud or a scam within the last 2 years. The most common form of fraud was the unauthorized use of a bank account or credit card number (18%). Other fraud or scams involved providing information by email or phone to a request that was later found not to be genuine (4%) or investing in a financial product that turned out to be worthless, such as a pyramid or Ponzi scheme (3%).

Thirty-eight percent of Canadians say they requested a credit report from Equifax Canada or TransUnion of Canada in the past 5 years, including 22% who had done so within the past 12 months. Persons who had checked more recently are more likely to consider themselves to have a bad or very bad credit rating (11% vs. only 3% of those who checked their credit report more than 10 years ago). Half of Canadians (48%) have never requested a credit report from Equifax Canada or TransUnion of Canada. In general, this tends to be the case for those who believe their credit rating is either good or very good.

Conclusion

This report provides results from the 2019 CFCS. It offers a first look at the steps Canadians are taking to take charge of their finances by budgeting, planning and saving for the future, and paying down debt. However, there are also emerging signs of financial stress for some Canadians. For example, about one third feel like they have too much debt, and a growing number are having trouble making bill, rent/mortgage and other payments on time.

About 4 in 10 Canadians say they found ways to increase their financial knowledge, skills and confidence in the past 5 years. They did this through a wide range of activities, such as reading books or other printed material on financial issues, consulting online resources, and pursuing financial education at work, school or community programs. Findings from the 2019 survey support evidence that financial literacy, resources and tools are helping Canadians to manage their money. For example, Canadians who have a budget perform better in terms of their financial well-being based on a number of indicators, such as managing cashflow, making bill payments and paying down debt. Further, those with a financial plan to save are more likely to feel better prepared and more confident about their retirement.

The Financial Consumer Agency of Canada (FCAC), along with a wide range of stakeholders and partners from across the country, provides numerous tools and resources to help Canadians meet these challenges and take charge of their finances.

To help Canadians who are facing financial pressures to manage their debts and day-to-day finances, FCAC offers tools that can help Canadians make informed decisions when planning to get a mortgage. For example, the Mortgage Qualifier Tool enables users to calculate a preliminary estimate of the mortgage they could qualify for based on their income and expenses. On top of this, the Mortgage Calculator Tool can help with determining mortgage payment amounts, and provides a mortgage payment schedule. In addition, FCAC also offers content that helps Canadians make a plan to be debt-free.

Because budgeting is crucial for many Canadians when it comes to managing their day-to-day finances, keeping up with bill payments and paying down debt, FCAC launched the Budget Planner in November 2019. This new interactive tool helps time-crunched or overwhelmed Canadians who may be having difficulties getting started with a budget. It integrates behavioural insights to help them build personalized budgets tailored to their unique financial needs and goals.

Having a financial plan is an effective way to start saving toward future goals and preparing for unexpected expenses. Financial stress can affect various aspects of life at home and at work. In response, FCAC created Financial wellness in the workplace to help employees and the self-employed cope with their unique financial challenges. Employers can use these tools to build financial wellness programs tailored to employees' needs. Canadians can also look to tools such as Your Financial Toolkit, a comprehensive learning program that provides basic information and tools to help adults manage their personal finances and gain the confidence they need to make better financial decisions. Module 10 of Your Financial Toolkit on how to calculate retirement income as well as the Canadian Retirement Income Calculator provide useful information about government retirement benefits, such as Old Age Security and the Canada Pension Plan. Finally, FCAC offers a number of tools to help Canadians achieve their financial savings goals, such as the Financial Goal Calculator. It is especially important to help Canadians with this facet of their finances given that saving behaviours are strongly related to financial well-being.

To help Canadians strengthen their financial literacy through financial advice and financial education, FCAC's online learning program called Your Financial Toolkit includes information on subjects such as retirement planning, tax planning, insurance and estate planning. Further, for those seeking information on how to better prepare for or cope with specific life situations, FCAC has developed web content called Life events and your money.

Finally, to help Canadians get started with estate planning, powers of attorney and credit reports, and to better protect themselves from financial fraud and scams, FCAC and other government departments provide a wide range of free online resources. These can get Canadians started on estate planning and better understanding their credit reports and scores. For more information on estate planning, see Estate planning, wills and dealing with death on FCAC's website. To learn more about powers of attorney, see What every older Canadian should know about: Powers of attorney and joint bank accounts. Moreover, as noted above, many Canadians, especially those aged 75 and older, are not aware of-or do not know where to find-information on how to protect themselves against financial fraud and scams ( FCAC, 2019). Along with a number of other government agencies, FCAC has developed resources to help Canadians learn more about financial fraud and scams, ways to minimize the likelihood of fraud, and steps to take if they suspect they have been a victim of fraud. To learn more about credit scores, correcting errors, ordering a credit report and more, Canadians should read Credit reports and scores.

I. Introduction

The Financial Consumer Agency of Canada (FCAC) ensures federally regulated financial entities comply with consumer protection measures, promotes financial education, and raises consumers' awareness of their rights and responsibilities. In 2015, FCAC launched Canada's first National Strategy for Financial Literacy - Count me in, Canada which identified 3 overarching priorities for the development of initiatives to bolster Canadians' financial literacy and financial well-being. These priorities included strengthening Canadians' ability to manage money and debt wisely, helping them plan and save for the future, and increasing their awareness about how to prevent and protect themselves against fraud and financial abuse ( FCAC, 2015).

The Canadian Financial Capability Survey (CFCS) is a cross-sectional survey that has been conducted on a 5-year cycle. Previous versions were fielded in 2014 and 2009. This report uses results from the 2019 survey to assess how Canadians are faring in terms of their financial literacy and financial well-being based on the priorities outlined in the National Strategy. It also aims to discover Canadians' financial strengths along with some of the current challenges. This includes learning about what Canadians know about financial services, their approaches to financial planning (day-to-day money management, budgeting and longer-term money management), their plans for the future, and how they perceive their financial situations ( Keown, 2011; FCAC, 2015).

As this report shows, many Canadians are taking steps to improve their financial literacy and financial well-being. A number of Canadians also indicate that they are facing challenges in managing their day-to-day finances, making bill payments, keeping up with financial commitments, and dealing with debt. All of this is occurring within the context of financial digitalization, which is forcing many Canadians to learn about and choose between an expanding and complex variety of financial products and services that bring both new challenges and new opportunities.

The results in this report are organized into 4 sections. The first section examines results related to debt, including types and amount of debt. The second examines budgeting and its relationship to financial outcomes. The third section examines savings, such as for retirement or an emergency fund. The fourth and last section examines a variety of financial consumer behaviours, such as education savings, financial education and the prevalence of financial scams and fraud.

About the 2019 Canadian Financial Capability Survey

FCAC commissioned EKOS Research Associates to field the 2019 Canadian Financial Capability Survey (CFCS) using Prob it, a nationally representative hybrid online/phone panel. To ensure the perspectives of all Canadians were reflected, the sample was augmented by random-digit-dial phone interviews. The 2019 survey was made up of 2 data collection instruments (a core survey and follow-up survey), which were administered between March 18, 2019 and May 30, 2019. The core survey covered content contained in the 2009 and 2014 surveys. In addition, the 2019 CFCS introduced a follow-up survey to cover new content on psychological factors, fraud, debt management and financial well-being.

For more details on the methodology and design of the questionnaire and survey fieldwork, see the report at Library and Archives Canada entitled: " Data Collection for the 2019 Canadian Financial Capability Survey: Methodology Report "

II. Coping with increasing financial pressures and managing day-to-day finances and debt

Average household debt now represents 177% of Canadians' disposable income, up from 168% in 2018 ( Statistics Canada, 2019). For Canadians, high debt levels mean that even small increases in the interest rates charged on credit products (such as lines of credit, mortgages, home equity lines of credit [HELOCs], vehicle leases and loans) can constrain future spending ( Lombardi et al, 2017; Burleton et al., 2018). The Bank of Canada notes that households with high indebtedness (defined as having debt levels equal to 350% or more of gross income) are most at risk if interest rates trend upwards ( Poloz, 2018).

Higher levels of indebtedness have been linked to financial stress, and can affect physical and mental health, resulting in fear and anxiety about the uncertainty of one's financial situation. Indeed, according to the Canadian Payroll Association, nearly 43% of workers are so financially stressed that their performance at work is suffering ( CPA, 2019a; CPA, 2019b). This section considers the types and amount of debt that Canadians hold and the explores approaches that Canadians are using to pay down debt.

Highlights

Almost one third of Canadians (31%) believe they have too much debt. Canadians are using a variety of credit products to finance a wide range of goods and services. For example, they are using debt to buy a house or condominium as a principal residence, finance a vehicle, pay for education and make day-to-day purchases.

Mortgages are the most common and significant type of debt held by Canadians. Overall, about 40% of Canadians have a mortgage; the median amount owing is $200,000. Most Canadians will hold a mortgage at some point in their lives. For example, almost 9 in 10 Canadian homeowners aged 25 to 44 (88%) have one. In addition, about 13% of Canadians have an outstanding balance on a home equity line of credit (HELOC). For those with an outstanding balance on their HELOC, the median amount owing is $30,000.

Other common types of debt include outstanding balances on credit cards (held by 29% of Canadians), vehicle loans or leases (28%), personal lines of credit (20%) and student loans (11%). Other less common types of debt include a mortgage for a secondary residence, rental property, business or vacation home (5%) or personal loan (3%).

While two thirds of Canadians (65%) are keeping up with bills and payments, a growing share are facing financial pressures. In particular, persons under the age of 65 are much more likely to be struggling to meet their financial commitments (39% vs. 22% of those aged 65 and older). In terms of keeping up with financial commitments, 8% of Canadians are falling behind on bills and other financial commitments, up from 2% in 2014. Certain groups are more likely to experience this type of financial pressure, including individuals under the age of 65 and those with household incomes under $40,000. Family circumstances are also important; those who are separated or divorced, or who are lone parents, are more likely to report feeing like they are falling behind on bill payments and other financial commitments. There is no significant difference in this regard between men and women.

In terms of managing monthly cashflow, about 1 in 6 Canadians (17%) have monthly spending that exceeds their income, while 1 in 4 (27%) borrow to buy food or pay for daily expenses because they run short of money. Again, persons under age 65 and those with household incomes under $40,000 are among those more likely to report these problems. In addition, persons who are separated or divorced, especially lone parents who are financially responsible for children, are more likely to report that their monthly income is not sufficient to cover their spending and that they have to borrow money to cover day-to-day expenses.

Types of debt

The results from the 2019 CFCS indicate that almost three quarters of Canadians (73%) have used some type of debt over the past 12 months (see also Statistics Canada, 2017) and almost one third (31%) believe they have too much debt. As shown below, Canadians use a variety of different credit products, including debts tied to their primary residence, such as mortgages and HELOCs. Other common types of debt include outstanding balances on credit cards (held by 29% of Canadians), vehicle loans or leases (28%), personal lines of credit (20%), student loans (11%), and mortgages for a secondary residence, rental property, business or vacation home (5% have a secondary mortgage).
Figure 1: Percentage of Canadians holding debt, by type of debt

Text version: Figure 1 - Percentage of Canadians holding debt, by types of debt

Mortgage debt and home equity lines of credit

Mortgages are the most common and significant type of debt held by Canadians. Results from the 2019 CFCS show that about 40% of Canadians currently have one. Most will hold a mortgage at some point in their lives. In fact, almost 9 in 10 Canadian homeowners aged 25 to 44 (88%) have a mortgage. In comparison, only about 17% of Canadian seniors aged 65 or older have a mortgage. Among those who have an outstanding balance on their mortgage, the median amount owing is $200,000. In fact, the median mortgage debt of Canadian families has more than doubled since 1999, even after adjusting for increases in salaries and the cost of living (i.e., inflation) ( Uppal, 2019).

For Canadian homeowners, a type of debt that has been gaining in popularity is the HELOC. In fact, the Canada Mortgage and Housing Corporation estimates that HELOC debt has grown faster than all other non-mortgage loans combined and now represents the second-largest contributor to household debt behind mortgages ( CMHC, 2018). Currently, about 13% of Canadians have an outstanding balance on a HELOC; the median amount owed is $30,000.
Figure 2: Distribution of outstanding balances on mortgages held by Canadian mortgage holders

Text version: Figure 2 - Distribution of outstanding balances on mortgages held by Canadian mortgage holders

Figure 3: Distribution of the outstanding balances on home equity lines of credit (HELOC) held by Canadian HELOC holders

Other types of debt

Aside from mortgages and HELOCs, more than half of Canadians (56%) have some type of other outstanding debt, such as a vehicle loan or lease, credit card debt, personal line of credit or student loan, or a mortgage on a secondary residence, rental property or business. It is important to examine these other types of debt because they often involve higher costs (due to higher interest rates), which could be an issue in terms of financial stress. As shown above, the most common types of outstanding debt include credit card debt (held by 29% of Canadians), vehicle loans or leases (28%), and personal lines of credit (20%). About 11% of Canadians have outstanding student loans; these are concentrated among younger people. For example, half (50%) of Canadians between the ages of 18 and 24 have an outstanding student loan. Relatively few Canadians have a mortgage on a secondary residence, rental property or business (5%) or a personal loan or other debts or liabilities (3%).

The 2019 CFCS asked respondents to estimate the total value outstanding on all of their debts together (excluding mortgages and HELOCs held on a primary residence), combining outstanding credit card balances, vehicle loans or leases, personal lines of credit, student loans, secondary mortgages or other loans. For those with any of these types of debt, the total combined median amount owing was $30,000. This is similar to the estimates for non-mortgage debt reported by Equifax Canada and TransUnion of Canada, which ranged from $23,500 to $30,000 in 2019 ( Equifax, 2019; TransUnion 2019).

The analysis below shows the median amount of debt for Canadians who have outstanding debt associated with a specific product. For example, the median outstanding debt for all Canadians with a vehicle lease or loan, regardless of what other types of debt they have, is $36,000. Those with student loans or an outstanding balance on their credit card have a slightly lower median debt of $28,000. This is likely due to the fact that these individuals are generally younger and slightly less likely to have accumulated other types of debt. For those with a mortgage on a secondary residence, rental property or business, the median debt amount is $262,000 when combining all types of debt.
Figure 4: Median amount of debt for persons, by type of debt

On a related note, most Canadians over age 18 (93%) have a credit card. While the majority (59%) say they always pay the balance owing in full every month, about 41% carry a balance from one month to the next. This is important because it means many Canadians are paying high interest rates to use their credit cards. The main reasons Canadians give for using a credit card are for accounting purposes, convenience or to build one's credit rating (38%), to collect reward points (30%), or to make online purchases (17%). A potential indicator of financial stress is that 1 in 10 Canadians (12%) mainly use their credit card because they are short of money.
Figure 5: Main reasons for using a credit card among Canadians who have one

Keeping up with bill payments and day-to-day money management

Given that many Canadians (31%) have indicated they have too much debt, it is not surprising that some are finding it difficult to manage their finances. Overall, about one third of Canadians (36%) indicated that they are struggling to manage their day-to-day finances or pay their bills. This is especially the case for those under age 65, who are much more likely to be struggling to meet their financial commitments (39% vs. 22% for those aged 65 and older).

For example, nearly 1 in 10 Canadians (8%) say they are falling behind on bill payments and other financial commitments. This is a considerable increase from 2% in 2014. A higher share of persons under the age of 55 (10%), and 15% of those with more modest household incomes (under $40,000), are falling behind. Family structure seems to be an important factor as about 17% of lone parents and 11% of those who are divorced or separated are falling behind on their financial commitments. By comparison, only 6% of individuals between 55 and 64 years old and 3% of those aged 65 and older are falling behind. Further, only about 5% of persons with a household income over $40,000 and 6% of those who were married or living with a common-law partner had trouble paying their bills on time. Again, there is no statistically significant difference between men and women.

When it comes to managing monthly cashflow, about 1 in 6 Canadians (17%) have monthly spending that exceeds their income. A relatively higher share of individuals aged 35 to 54 (21%) and those with household incomes of less than $40,000 (27%) are in this situation, along with a higher share of lone parents (34%) and persons who are divorced or separated (24%). By comparison, about 14% of persons aged 65 or older and 15% of persons under age 35 have monthly spending that exceeds their income. Further, about 14% of those who have a household income over $40,000 and 15% of those who are married or living with a common-law partner have monthly spending that exceeds their income. Women are slightly more likely than men to report that their monthly spending exceeds their income (19% vs. 16%).

Further, 1 in 4 Canadians (27%) borrow to buy food or pay for daily expenses because they run short of money. A higher share of persons under age 55 (34%), who have household incomes under $40,000 (39%), who are separated or divorced (37%), or who are lone parents (54%) are in this situation. By comparison, a lower share of those aged 65 and older (13%), persons with a household income above $40,000 (25%), and those who are married or living with a common-law partner (25%) report needing to borrow for daily expenses. Again, the difference between women and men is modest, at 29% vs. 26% respectively. These results are important because credit and cashflow challenges lower an individual's level of financial well-being ( FCAC, 2018).
Figure 6: Percentage of Canadians struggling to make bill payments or manage cash flow over the past 12 months

Tools and resources

Because of the importance of mortgages in the financial lives of many Canadians, FCAC offers tools that can help them make informed decisions. For example, the Mortgage Qualifier Tool enables users to calculate a preliminary estimate of the mortgage they could qualify for based on their income and expenses. The Mortgage Calculator Tool can help determine mortgage payment amounts and provide a mortgage payment schedule. In addition, FCAC also offers content that helps Canadians make a plan to be debt-free.

III. The role of budgeting in managing day-to-day finances and paying down debt

Budgeting is a fundamental way of managing day-to-day finances that has been shown to help people prioritize their spending when faced with resource constraints ( Fernbach, Kan, & Lynch, 2015). It can also lead to better outcomes related to money management and financial well-being ( FCAC, 2019). Knowing how to budget effectively is essential for people to live within their means and feel in control of their financial lives. This section explores the use of budgeting in Canada and its relationship to money management.

Highlights

Creating and maintaining a budget is one of the most important first steps for Canadians to manage their money. About half (49%) of Canadians have a budget, up from 46% in 2014 (FCAC, 2015). The most common method of budgeting is the use of a digital tool, such as a spreadsheet, mobile app or other financial software (20%). This is followed by traditional approaches, such as writing a budget out by hand or using jars or envelopes (14%).

The evidence indicates that another 1 in 6 Canadians (17%) could benefit from having a budget. These individuals cite a wide range of reasons for not budgeting, such as not having enough time or finding it boring (9%) or feeling overwhelmed about managing money (6%). These time-crunched and overwhelmed non-budgeters experience considerable challenges in managing their money.

About one third of Canadians (34%) say they do not need a budget. These individuals tend to be older and have fewer debts and day-to-day money management challenges compared with other Canadians. For example, the majority (82%) of seniors aged 65 or older indicate that they do not need a budget. Moreover, a high share of individuals who do not have a mortgage (83%) or other types of debt (79%) say they do not need a budget. Finally, relatively few individuals who do not need a budget have problems keeping up with financial commitments (3% vs. 8% overall). They are also relatively less likely to have monthly spending that exceeds their income (10% vs. 17% overall) or to run short of money for daily expenses (15% vs. 27% overall).

For most Canadians, however, evidence from the 2019 CFCS strongly suggests that budgeting helps with managing day-to-day finances and debt repayment. Compared with non-budgeters who are time-crunched or feel overwhelmed, Canadians who budget are less likely to be falling behind on their financial commitments (8% vs. 16%). In addition, budgeters are less likely to spend more than their monthly income (18% vs. 29%) or to need to borrow for day-to-day expenses because they are short of money (31% vs. 42%). Interestingly, Canadians who actively use digital tools for budgeting (compared with other methods) are among the most likely to keep on top of their bill payments and monthly cashflow.

Having a budget is related to paying down debt. Compared with Canadians who feel too time-crunched or overwhelmed to budget, those with a budget are 10 percentage points more likely to be taking actions to pay down their mortgage (35% vs. 24%) and other types of debt (57% vs. 47%) more quickly.

Methods of budgeting

For many Canadians, creating and maintaining a budget is one of the most important first steps to managing their money. In fact, almost half of Canadians (49%) had a budget in 2019, up from 46% in 2014. The evidence indicates that another 1 in 6 (17%) could benefit from having a budget because they are struggling to manage their money. These individuals cite a wide range of reasons for not budgeting. Among the most common are not having enough time or finding it boring (9%), or feeling overwhelmed about managing money (6%). As shown below, these time-crunched and overwhelmed non-budgeters are likely to be experiencing considerable challenges in managing their money.

As for Canadians who do not feel they need a budget, studies have found that they differ in their financial situations, attitudes and outcomes compared with those who cite other reasons for not having a budget ( FCAC, 2019). For example, the majority of seniors aged 65 or older (82%) indicate that they do not need a budget. Moreover, individuals who do not have a mortgage (83%) or other types of debt (79%) are more likely to say that they do not need a budget. Finally, relatively few individuals who do not need a budget have problems keeping up with financial commitments or making bill or mortgage payments on time (3% vs. 8% overall). They are also relatively less likely to have monthly spending that exceeds their income (10% vs. 17% overall) or to run short of money for daily expenses (15% vs. 27% overall).

Canadians most commonly budget using a digital tool, such as a spreadsheet, mobile app or other financial software (20%). This is followed by traditional methods, such as writing a budget down by hand or using jars or envelopes (14%). Other Canadians mainly use automatic bill payments to track money in their budget (6%) or keep track of their budget in their heads or use other methods (10%). Importantly, a recent study by FCAC found that more active approaches to budgeting, such as using a digital tool or writing it down by hand, help build the confidence and skills needed to manage money effectively ( FCAC, 2019).
Figure 7: Percentage of Canadians who have a budget, by budgeting method

Budgeting helps Canadians pay down debt and keep up with bill payments

For those who have difficulties keeping up with bills and financial commitments, creating and following a budget can be an effective tool. It can help them meet financial commitments, manage monthly cashflows and pay down debt.

Budgeting is associated with actively taking steps to pay down mortgage debt

About one third of Canadians (34%) who have a mortgage are taking steps to pay it down more quickly than the minimum repayment schedule requires. In the past 12 months, a roughly equal share of mortgage holders either increased their regular mortgage payment amount (16%), made a lump sum payment (15%), or made more frequent weekly or bi-weekly payments (15%). About 9% used some type of combined approach, with the most common being to increase the frequency (weekly or bi-weekly) and amount of the regular mortgage payment. Importantly, budgeting can help with creating a plan to pay down debt faster. Relative to Canadians who feel too time-crunched or overwhelmed to budget, those with a budget are more likely to take active measures to pay off their mortgage faster (35% vs. 24%).
Figure 8: Percentage of Canadians with a mortgage who took steps to repay faster, by budgeting group

Budgeting is associated with actively paying down other types of debt

Half of Canadians (50%) who have other types of debt (for example, a credit card, vehicle loan or lease, or outstanding balance on a line of credit) are taking steps to pay it off faster. During the past 12 months, the most common methods used to pay down this debt involved making extra payments (31%) or focusing on paying down high-interest debt (26%). Others increased their regular payment amount (20%) or paid down smaller debts (13%).

Each approach has its own advantages: paying off high-interest debt reduces the amount of interest paid overall, while paying off smaller debts can lead to a feeling of accomplishment and increase motivation, even if these debts are smaller in value ( Gal & McShane, 2012). Regardless, research suggests that focusing on reducing one debt at a time may be the most effective way to stay motivated and successfully pay down debts versus trying to pay multiple debts down simultaneously (Kettle et al., 2017).

Again, putting a plan in place to pay down debt can be an important step to help Canadians take charge of their finances, and it appears that budgeting supports this process. For example, compared with those who are too time-crunched or overwhelmed to budget, Canadians who budget are more likely to act on paying off debts quickly (57% vs. 47%).
Figure 9: Percentage of Canadians with other debt (besides mortgage and HELOC), who took steps to repay faster by method of repayment

Figure 10: Percentage of Canadians with other debt (besides mortgage and HELOC), who took steps to repay faster, by budgeting group

There is also a big difference in how budgeters use their credit cards compared with those who feel too time-crunched or overwhelmed to budget; the former are much less likely to carry a balance (45% vs. 58%). Further, very few budgeters use a credit card mainly because they run out of money (3%). Rather, Canadians who budget use their credit cards mainly for accounting purposes, for convenience or to build up a credit history (38%), or to collect reward points (29%). In contrast, persons who feel too time-crunched and overwhelmed to budget often use their credit cards because they run out of money (21%) or to make online purchases (21%).
Figure 11: Main reason for credit card use among Canadians, by budgeting group

Budgeting and keeping on top of bills

Finally, having a budget can help Canadians keep on top of their bill payments and manage their day-to-day finances more broadly. For instance, compared with non-budgeters who are time-crunched or feel overwhelmed, Canadians who budget are less likely to fall behind on their financial commitments (8% vs. 16%). In terms of managing monthly cashflows, budgeters are less likely to have spent more than their monthly income (18% vs. 29% for non-budgeters who feel time-crunched or overwhelmed). Budgeters are also less likely to need to borrow for day-to-day expenses due to running short of cash (31% vs. 42%).

Interestingly, Canadians who actively use digital tools for budgeting are among the most likely to keep on top of their bill payments and monthly cashflow. As such, following a budget can strengthen financial resilience to deal with unexpected events in the future, which in turn can lead to higher financial well-being. Indeed, research shows that individuals who use budgets are more likely to engage in priority planning to differentiate needs from wants ( Fernbach et al., 2015).
Figure 12: Percentage of Canadians with difficulties managing money and keeping up with bill payments, by budgeting group

Tools and resources

Starting a budget does not have to be difficult. FCAC recently conducted a pilot project that provided Canadians with educational messaging about budgeting as well as links to FCAC's budget tool via a mobile app. Overall, 1 in 7 (14%) who participated in the interventions began budgeting. Over half of those who started budgeting were still doing so as many as 18 months later. Further, these budgeters demonstrated more confidence and an improved ability to meet their financial commitments compared with non-budgeters ( FCAC, 2019). To help Canadians who may be having difficulties getting started with a budget because they feel time-crunched or overwhelmed, FCAC launched the Budget Planner, a new interactive online tool to help Canadians manage their finances. Launched in November 2019, the tool integrates behavioural insights to help Canadians build personalized budgets tailored to their unique needs and financial goals. For more ideas on how to successfully create a budget and live within your means, check out FCAC's web content on how to make a budget.

IV. Saving toward future goals and preparing for unexpected life events and expenses

Budgeting is not only useful in managing day-to-day finances and debt-it can also help Canadians meet long-term financial goals, such as becoming financially prepared for the future. This can include planning for retirement, saving for education or saving to buy a home. It can also include shorter-term goals like making home repairs or improvements, buying a vehicle or taking a vacation. For many Canadians, planning for the future also means having an "emergency fund" in place in order to be prepared for unexpected life events and expenses.

Statistics Canada estimates that on average, Canadian households put aside savings of about $850 in 2018. It is important to keep in mind that savings patterns can vary considerably over a person's lifecycle as they increasingly concentrate on saving for retirement. For example, individuals in households where the primary earner is under 35 years old have average net savings of about $5,000 per year. These savings grow to an average of more than $10,000 annually for those aged 35 to 55 ( Statistics Canada, 2018a; Statistics Canada, 2018c; Statistics Canada, 2017b). In retirement, Canadians are more likely to be drawing down their pension assets and other retirement savings. In fact, seniors aged 65 or older withdrew an average of about $17,000 from these savings each year. It is important to note that some Canadians are not saving at all. This choice can be influenced by both expected and unexpected life events that cause individuals to incur debt or draw down previous savings to finance their living costs ( Statistics Canada, 2018a).

Highlights

About 7 in 10 (69%) Canadians who are not yet retired are preparing financially for retirement, either on their own or through a workplace pension plan. This is up slightly from 66% in 2014 (FCAC, 2015). Interestingly, this may reflect the fact that Canadians have become increasingly aware of the need to save for retirement over the past 5 years. For example, almost half (47%) of Canadians say they know how much they need to save to maintain their desired standard of living in retirement-an increase of 10 percentage points since 2014 (37%).

Interestingly, Canadians who have a plan to save for retirement are more confident that they know how much they need to save (56% vs. 28%) and that their savings will provide the standard of living they hope for (71% vs. 32%), versus those who do not have a plan to save. In fact, anxiety about retirement is heavily concentrated among Canadians who do not yet have a plan, especially among those who expect to rely primarily on government public pension benefits, such as Old Age Security or the Canada Pension Plan (or the Québec Pension Plan).

Setting financial goals can be an important step in building an effective financial plan and managing money. Interestingly, about two thirds of Canadians (66%) are planning some type of major purchase or expenditure within the next 3 years, such as buying a home or condominium as a principal residence (11%), making a home improvement or repair (17%), taking a vacation (14%), or buying a vehicle (13%). Having a budget can help people establish a plan for how to afford financial goals that involve major expenditures. Interestingly, only 6% of budgeters do not yet have a plan for how they are going to pay for their next major purchase versus almost 15% of those feel too time-crunched or overwhelmed to budget.

Almost one quarter of Canadians aged 18 to 24 (23%) cite education as the main major expenditure they are planning in the next 3 years; it is the most common response for this age group. The median cost is estimated at between $20,000 and $29,999. However, there is considerable variation, likely due to differences in tuition costs between educational programs (for example, a 1-year vs. a 4-year program).

Among Canadians who are planning post-secondary education in the next 3 years, almost half (47%) anticipate using mostly savings to pay for it, while 40% expect to borrow at least a portion and 12% do not yet have a plan for how they are going to pay for their education. Currently, half of Canadians aged 18 to 24 (50%) have student loans. The share with an outstanding balance on their student loan declines with age, to about 36% for those aged 25 to 29 and 21% for those aged 30 to 34. Only about 5% of Canadians have an outstanding balance on their student loan after age 35.

Canadian parents plan to fund their children's education in a range of ways. Among those who are financially responsible for children (living in their household or elsewhere), about three quarters (73%) are saving for their children's education, whether through a Registered Education Savings Plan (62%) or other means (35%). Interestingly, there has been an 11-percentage point increase in the share using a Registered Education Savings Plan (62% vs. 51% in 2014). One third (33%) of Canadian parents anticipate either co-signing a student loan (25%) or taking out a separate loan (8%) to help pay for their child's education.

In terms of preparing for unexpected life events and expenses, almost two thirds (64%) of Canadians have an emergency fund sufficient to cover 3 months' worth of expenses, while a similar share (65%) are confident that they could come up with $2,000 if needed in the next month.

In general, Canadians who have household incomes of at least $40,000 and persons who have paid off the mortgage on their principal residence are more likely to have an emergency fund and be confident that they could come up with $2,000 to cover an unexpected expense. Seniors aged 65 and older and individuals who are married or widowed are also more likely to have an emergency fund and be able to cover an unexpected expense. In contrast, individuals who are living with a common-law partner, separated or divorced, or single and never married, especially lone parents, are less likely to have emergency funds or say they could cover this unexpected cost. Finally, even though women and men are equally likely to have money set aside in an emergency fund, women are less confident that they would be able to cover an unexpected cost of $2,000.

For those who still need to build an emergency fund or establish a regular habit of saving, having a budget can be an effective first step. For example, more than 6 in 10 budgeters (65%) have emergency savings compared with only 4 in 10 who feel too time-crunched or overwhelmed to budget (39%). Moreover, about 61% of budgeters indicate that they would be able to come up with $2,000 to cover an unexpected expense compared with only 46% of those who feel too time-crunched or overwhelmed to budget.

Putting in place a plan for retirement savings

About 7 in 10 Canadians (69%) who are not yet retired are preparing financially for retirement either on their own or through a workplace pension plan. This is up slightly from 66% in 2014 ( FCAC, 2015). Further, almost half of Canadians (47%) report that they know how much they need to save for retirement, up from 40% in 2014. A recent survey by the Canadian Payroll Association showed that Canadian employees estimate that they need to save a median amount of $500,000 to $1,000,000 for retirement ( CPA, 2018). Those with lower levels of financial knowledge, less education and lower incomes are least likely to be aware of what they will need to save to retire comfortably (Boisclair et al., 2014; Messacar, 2017; FCAC, 2015).

Among non-retired Canadians, the majority (58%) expect that their primary source of income in retirement will be their own retirement savings, whether through a workplace pension (28%) or personal savings in registered retirement savings plans (RRSPs), tax-free savings accounts or other non-registered savings accounts (30%). Among those who say they are preparing for their retirement, 92% are doing so using either their workplace pension or an RRSP. At the same time, government pension benefits, such as Old Age Security and the Canada Pension Plan (as well as the Québec Pension Plan in that province) remain crucial-particularly for those who do not yet have a plan to save for their retirement, since more than half (52%) expect this to be their primary source of income in retirement.

Finally, about 10% of Canadians plan to continue working or to rely mainly on rental income or business income as their main source of income in retirement. This is similar to the 2014 findings. Statistics Canada indicates that the share of seniors aged 65 and older who report working (mostly in part‑year or part‑time work) has almost doubled since 1995 for both men and women ( Statistics Canada, 2017). For many Canadians who do not have a plan to save for retirement, many anticipate having to work longer into their retirement years (19% vs. 7% for those with a plan to save for retirement).
Figure 13: Non-retired Canadians' anticipated primary source of retirement income

Over the past 5 years, Canadians have become increasingly aware of the need to save for retirement. For example, almost half of Canadians (47%) know how much they need to save to maintain their desired standard of living in retirement-an increase of 10 percentage points versus 2014 (37%). However, this awareness has been paired with increasing anxiety and uncertainty about retirement for some Canadians. For example, the share of Canadians who are confident that they will have the standard of living they hope for in retirement declined from 65% in 2014 to 56% in 2019. This worry is concentrated among those who do not have a plan for retirement savings. Among those who do not have a financial plan to save, only 28% are confident that they will have the standard of living they hope for in retirement, down from 57% in 2014. In contrast, the majority of Canadians who are saving on remain confident that they will achieve the standard of living they hope for in retirement (68% vs. 72% in 2014).

Identifying other common financial goals of Canadians

Saving for retirement is only one of many financial goals Canadians are striving to achieve. About two thirds (66%) are planning some other type of major purchase or expenditure in the next 3 years. This can involve important financial decisions and life transitions, such as buying a house or condominium, planning for their own or a child's education, or undertaking a major home improvement or repair. It could also include financial goals, such as buying a vehicle or planning a vacation.
Figure 14: Percentage of Canadians planning a major expenditure or purchase in the next 3 years

A house or condominium as a principal residence

About 1 in 10 Canadians (11%) are planning on buying a house or condominium as a principal residence at some point in the next 3 years, similar to the number reported in 2014. Almost two thirds (63%) of those planning on purchasing a house or condominium are expecting to make a down payment of 20% or less. Prospective Canadian home buyers mainly plan to use savings (57%), proceeds from the sale of a previous home (32%), or money withdrawn from an RRSP (28%) to fund their down payment.

The 2019 CFCS did not collect information about the prices these prospective buyers expected to pay for their houses or condominiums. However, it is interesting to note that among current homeowners, Canadians estimate their principal residence to have a median value of $300,000 to $399,999. For those in more urban areas, the estimated median home value ranged from $400,000 to $499,999. In more rural areas, the range was $200,000 to $299,999.
Figure 15: Distribution of Canadian homeowners' estimated value of their current residence

Other types of major purchases

Other financial goals for which Canadians are planning over the next 3 years include a home repair or renovation (17%), vehicle purchase (13%), or vacation (14%). The median cost ranges from $10,000 to $19,999 overall. For these purchases, many Canadians plan on using entirely savings. This is especially the case for vacations (60%), but also for home renovations and repairs (35%) and vehicle purchases (25%). For larger expenditures in particular, a portion of Canadians anticipate borrowing most or all of the needed funds, most frequently to pay for their next vehicle purchase (27%) or a home renovation (21%). A smaller portion of Canadians are planning on putting money toward their own education or their child's education (6%).
Figure 16: Estimated cost of major purchase planned within next 3 years, by type of purchase

* All vacation expenditures over $20,000 are grouped into this category due to small sample sizes.

Planning ahead for education

For many younger Canadians, one of the first major expenses for which they need to plan is post-secondary education, whether that means technical or vocational training, a community college program or a university degree. This section looks at how young Canadians are planning to pay for their educations, along with support from their parents.

Paying for post-secondary education

Overall, about 6% of Canadians are planning post-secondary education as their next major expenditure in the next 3 years, either for themselves or for their children. Moreover, almost one quarter of Canadians aged 18 to 24 (23%) cited education as the main major expenditure they were planning-the most common response for this age group.

The median estimated cost for this education is between $20,000 and $29,999, but there is considerable variation, likely due to differences in program and length of study. The average annual tuition cost for Canadian full-time students is $6,838 for undergraduate programs and $7,086 for graduate programs for the 2018/19 academic year ( Statistics Canada, 2018b). Almost half (47%) of those planning on post-secondary education, either for themselves or their children, anticipate using mostly savings to pay for their education, while 40% expect to borrow at least a portion and 12% do not yet have a plan for how they are going to pay for their education.
Figure 17: Distribution of Canadians' estimated education costs among those planning post-secondary education within the next 3 years

Figure 18: How Canadians plan to pay for post secondary education costs expected within the next three years

Parents' support for their children's educations

The majority of Canadian parents plan to support their children's education in a range of ways. This can include providing financial support through savings, employment or pension income or by borrowing. It can also include practical support, such as the use of a vehicle or room and board.

For example, almost three quarters (73%) of Canadians who are financially responsible for children are saving for their children's education, similar to 2014 (71%) ( FCAC, 2015). Interestingly, there has been an 11 percentage point increase in the share of parents using a Registered Education Savings Plan (RESP) (62% in 2019 vs. 51% in 2014). Even among parents with more modest household incomes (under $40,000), a substantial share (37%) have RESPs for their children. This is important because many lower-income Canadian families who have set up RESPs may be eligible for the Canada Learning Bond, which can provide up to $2,000 per eligible child ( ESDC, 2019).

Similarly, the Canada Education Savings Grant provides an incentive for parents, family and friends to save for a child's post-secondary education by paying a grant based on the amounts contributed to the RESP, regardless of household income. For Canadian parents with RESPs, the median amount saved is $10,000 to $15,000. This suggests that most parents hope to provide some financial support in terms of savings; but it is important to keep in mind that this amount would only cover a portion of the tuition costs for many 3- and 4-year programs, and is less than the amount most people say they need to save (a median amount of $20,000 to $29,999, as above). Further, for many parents, these RESP savings are being used to support more than 1 child.

Parents also plan to support their children's education in other ways, such as by providing money from their employment or pension income (32%) or borrowing (33%). This includes about 25% who expect to help by co-signing for a student loan and 8% who plan on taking out a separate loan themselves for their children's education. Finally, on top of financial support, a number of Canadian parents plan to provide practical help, such as free room and board (57%) or the use of a vehicle (33%) for young people who are still in school.
Figure 19: Parents' planned methods of helping children pay for post-secondary education

Figure 20: Estimated value of Registered Education Savings Plans (RESPs) among parents using them

Managing student loans

A recent study found that Canadian millennials born from 1980 to 2000 are more likely to have outstanding student loans compared with previous generations ( Robson & Loucks, 2018). In fact, half of Canadians aged 18 to 24 (50%) have outstanding debt related to a student loan. The share with an outstanding balance on their student loan declines with age, to about 36% for those aged 25 to 29 and 21% for those age 30 to 34. Only about 5% of Canadians had an outstanding balance on their student loan after age 35.
Figure 21: Percentage of Canadians with a student loan, by age group

Establishing an emergency fund

Having a plan to regularly set aside money to cover unexpected expenses-such as an emergency fund or a "rainy day fund"-is important for Canadians' financial well-being. Evidence shows that individuals who actively save have higher levels of financial resilience as well as higher levels of overall financial well-being. In other words, regardless of the amount of money someone makes, regular efforts to save for unexpected expenses and other future priorities appear to be the key to feeling and being in control of personal finances ( FCAC, 2018).

Results from the 2019 survey indicate that almost two thirds of Canadians (64%) have an emergency fund that could cover 3 months' worth of expenses. A relatively higher share of persons aged 65 or older (80%), who have household incomes of $40,000 or more (67%), who have paid off their mortgage (85%), or who are married (70%) or are widows or widowers (78%) have these precautionary savings. In contrast, a lower share of Canadians who are aged 55 or younger (54%), who have household incomes under $40,000 (48%), who have a mortgage (57%) or who rent (50%), or who are divorced or separated (55%), living with a common-law partner (54%), or single and never married (54%), have an emergency fund to cover 3 months of expenses. Among the least likely to have these funds are lone parents; only 36% have an emergency fund sufficient to cover 3 months of expenses.

On a related note, about two thirds of Canadians (65%) are confident that they could come up with $2,000 if needed in the next month.Footnote 3 As noted earlier, individuals with more financial resources are considerably more likely to be able to cover this type of unexpected expense. For example, almost three quarters of Canadians (74%) with household incomes of at least $40,000 and 83% of Canadian homeowners without a mortgage could cover a $2,000 expense. Further, a relatively high share of Canadians aged 65 or older (77%) or who are married (74%) or widowed (70%) were confident that they could come up with this amount if needed. By comparison, fewer than 40% of those with household incomes under $40,000, 67% of those with a mortgage, and only 48% of renters could cover an unexpected expense of $2,000 if needed in the next month. Further, a lower share of persons aged 55 and under (60%) or who are living with a common-law partner (64%), separated or divorced (56%), or single and never married (53%) say they would be able to cover this unexpected expense. Only 39% of lone parents say they could cover this unexpected cost. Women are less likely than men to feel that they would be able to cover an unexpected expense of $2,000 (61% vs. 68% for men).

For those who still need to build an emergency fund or establish a regular habit of saving, having a budget can be an effective first step. For example, more than 6 in 10 budgeters (65%) have emergency savings compared with only 4 in 10 persons (39%) who feel too time-crunched or overwhelmed to budget. Moreover, about 61% of budgeters indicated that they would be able to come up with $2,000 to cover an unexpected expense compared with only 46% of persons who feel too time-crunched or overwhelmed to budget.
Figure 22: Percentage of Canadians with emergency funds sufficient to cover 3 months' expenses or an unexpected expense of $2,000

Tools and resources

Planning for retirement

Other financial goals

FCAC offers a number of tools to help Canadians achieve their financial savings goals. One is the online resource Your Financial Toolkit. Module 3 of this program is specifically designed to provide tools and tips to help Canadians save. Canadians can also use FCAC's Financial Goal Calculator to set savings goals. It is especially important to help Canadians with this aspect of their finances because saving behaviours are strongly related to financial well-being (FCAC, 2018).

Many younger Canadians and their parents use student loans to finance post-secondary education. Planning ahead and having a budget is an important part of effectively managing student loans. In order to help younger Canadians make a plan for how they will finance their education, FCAC provides tips on how to budget for student life and a student budget worksheet to help build a realistic budget.

For parents saving for their children's education, the Government of Canada's website on Registered Education Savings Plans provides information on what an RESP is and how to choose an RESP plan that is right for your family. Canadian families with more modest incomes may also be eligible to apply for the Canada Learning Bond, which provides additional money to an RESP to help with the costs of a child's full- or part-time studies after high school. Finally, the Ontario Securities Commission's report on saving for your child's education, provides a summary of the characteristics, costs and advantages of different types of RESPs.

Emergency funds

For those who still need to build an emergency fund or establish a regular habit of saving, having a budget can be an effective first step. For example, more than 6 in 10 budgeters (65%) have set aside emergency savings compared with only 4 in 10 persons (39%) who feel too time-crunched or overwhelmed to budget. Canadians can use FCAC's Budget Planner to make a budget. To learn more about why it is important to save for unexpected events and expenses, and for tips on how to set up an emergency fund, see FCAC's Setting up an Emergency Fund.

V. Strengthening financial literacy through financial advice and financial education

In Canada, there are myriad different ways in which Canadians can seek financial advice on a wide range of topics, such as retirement planning, taxes, insurance, debt management and general financial knowledge. Making use of financial advice is important because it is associated with greater financial confidence and improved retirement planning ( FCAC, 2017). Further, individuals who seek financial advice report having less finance-related stress and more financial confidence (Letkiewicz et al., 2016); retirees who seek advice on financial products are more likely to say their living standards in retirement meet their expectations ( FCAC, 2017). Moreover, there is evidence of a virtuous/vicious cycle: people with high financial confidence may be more open to seeking financial planning advice while many with higher financial stress do not seek financial advice (Letkiewicz et al., 2016).

Further, a considerable portion of Canadians of all ages engage in either formal or informal learning on financial matters. This is important because the complexity of the financial marketplace is increasing rapidly. Recent research shows that financial education tends to improve financial confidence and self-efficacy ( Rothwell et al., 2017) and that these characteristics are related to financial well-being ( Kempson, Finney, & Poppe, 2017). Financial education has also been shown to be related to positive changes in financial behaviours, such as an increase in saving ( Kaiser et al, 2019; Kaiser et al. 2017; Bernheim & Garrett, 2003).

This section examines the share of Canadians who take steps to increase their personal knowledge and understanding of financial matters, as well as what they do to increase their knowledge and outcomes related to their financial education efforts.

Highlights

There are many ways to obtain information about financial matters. About half of Canadians seek financial advice from a professional financial advisor or planner (49%), followed by banks (41%) and friends or family members (39%). Canadians also seek advice from the Internet (33%), radio or television (10%), and newspapers and magazines (15%).

Overall, Canadians between the ages of 18 and 34 years are more likely to ask friends or family members (59%) or seek financial advice using the Internet (51%). In contrast, Canadians aged 65 and older are more likely to seek advice from a financial advisor or planner (51%) or from a bank (41%). They are much less likely to consult the Internet for financial advice (13%).

About 41% of Canadians say they sought advice on a specific subject area or financial product at some point during the past 12 months. Overall, Canadians most commonly seek advice about general financial planning (24%). This is followed by retirement planning (19%), insurance (12%), and tax planning (11%). Less common subjects for financial advice include estate planning (7%) and planning for children's education (6%). This is likely due at least in part to the fact that these topics are more relevant to specific life stages.

Almost half of Canadians (44%) say they engaged in some type of financial education to strengthen their financial knowledge over the past 5 years, most commonly by reading a book or other printed material (22%), using online resources (16%) or pursuing financial education at work (9%). Less commonly, they took in-person courses at a school (7%) or through a not-for-profit or community organization (5%).

There are considerable differences in the method of learning by age. For instance, half of Canadians aged 18 to 34 (56%) take steps to strengthen their financial knowledge, mainly through online study (26%) or at work or in school (24%). In contrast, only one third of Canadian seniors aged 65 or older (32%) say they take active steps to increase their personal knowledge and understanding of financial matters, mostly by reading a book or other printed materials (17%).

For Canadians who tried to increase their financial knowledge, 80% say they succeeded, and almost half (46%) say it helped them prepare for retirement. Other outcomes include a greater understanding of debt (37%), of how to create and maintain a budget (36%), and of how to achieve savings goals (34%).

Sources of financial advice

Canadians obtain information about financial matters in a variety of ways. About half seek financial advice from a professional financial advisor or planner (49%), followed by banks (41%) and friends or family members (39%). Canadians also conduct Internet research (33%), read newspapers and magazines (15%), and get advice from radio or television programs (10%). However, there are notable age-related differences.

Overall, Canadians between the ages of 18 and 34 years are more likely to ask friends or family members for advice (59%) compared with other age groups. This finding is important because young people who speak with their families about financial matters tend to have a higher level of financial literacy ( OECD, 2015). In addition, younger Canadians frequently consult the Internet for financial advice (51%), which reflects the growing use of online or mobile financial services and products and advances in financial technologies ( Competition Bureau Canada, 2018; Edenhoffer, 2018; Engert et al., 2018). In fact, a recent FCAC survey found that 97% of Canadians under age 65 conduct at least a portion of their banking online ( FCAC, 2019).

In contrast, older Canadians are more likely to use advice from a financial advisor or planner (51%) or from a bank (41%), and are much less likely to rely on Internet sources (13%). Indeed, recent research by FCAC found that seniors use and prefer more traditional forms of banking and communication. This research found that nearly one third of seniors most often bank in person, and that many prefer to receive information about their banking products and services through more traditional methods, such as by mail or in person at a branch. This is largely due to safety and security concerns. Further, a quarter of seniors who have banked online in the past 12 months experienced negative issues, such as a website crash, trouble navigating, or forgetting a password ( FCAC, 2019).
Figure 23: Canadians' preferred sources of financial advice

Figure 24: Canadians' preferred source of financial advice, by age group

Types of financial advice sought by Canadians in the past year

It is important not only to know where Canadians look for financial advice, but also the subject areas and issues they are seeking advice on. In the past 12 months, about 41% of Canadians sought advice on a specific subject area or financial product, including: general financial planning (24%), retirement planning (19%), insurance (12%), and tax planning (11%). Less common types of financial advice included estate planning (7%) and planning for children's education (6%). This is likely due at least in part to the fact that these topics are more relevant to specific life stages.

Interest in financial advice follows distinct life patterns. For example, advice related to retirement planning is of high interest to Canadians of all ages up until age 65 but then drops off dramatically. Advice on planning for children's education is highest among Canadians aged 35 to 54-precisely the ages when many are focused on raising children. Financial advice on insurance is also of most interest to those under the age of 55. Interest in tax planning is fairly level across age groups, while interest in estate planning increases slightly for those in the oldest age groups.
Figure 25: Percentage of Canadians seeking financial advice over past 12 months, by subject

Figure 26: Percentage of Canadians seeking financial advice, by age group and subject

Methods of financial education and financial learning

Over the past 5 years, almost half of Canadians (44%) engaged in some type of financial education to strengthen their financial knowledge, most commonly by reading a book or other printed material (22%), conducting online research (16%), or pursuing financial education at work (9%). Less commonly, adults took in-person courses at a school (7%) or through a not-for-profit or community organization (5%).

There are considerable differences in the likelihood and the preferred methods of financial learning for different age groups. For example, more than half of Canadians aged 18 to 34 (56%) have taken steps to strengthen their financial knowledge, mainly through online study (26%) or at work or school (24%). In contrast, only one third of Canadians aged 65 or older engaged in financial learning over the past 5 years (32%). Seventeen percent of seniors did so by reading a book or other printed materials. Only 7% of persons in this age group participated in online financial learning. Again, this corresponds with the methods that seniors prefer for seeking advice and financial information ( FCAC, 2019).
Figure 27: Percentage of Canadians engaged in different types of financial learning

Figure 28: Percentage of Canadians engaged in different types of financial learning, by age group

* Note that the categories "From the media" and "Other" are not included because there were not enough Canadians from each age group to analyze these data.

Subject matter and outcomes of financial education and financial learning

Among Canadians who took steps to strengthen their financial knowledge, 8 of 10 (80%) increased their general financial knowledge and almost half (46%) learned about retirement. Other outcomes include a greater understanding of debt (37%), how to create and maintain a budget (36%), and how to achieve savings goals (34%). Among younger Canadians, the overwhelming majority increased their financial knowledge, generally on a wide range of subject areas. For those aged 18 to 34, key outcomes include improvements related to general financial knowledge (84%) along with retirement planning (44%) and debt management (41%); however, many also learned about topics such as budgeting (40%) and achieving savings goals (37%). For older Canadians, there is an increasing concentration on learning about retirement planning until about age 65. In fact, 53% of individuals aged 55 to 64 who took steps to increase their financial knowledge focused on material related to retirement planning.
Figure 29: Self-reported improvements in financial knowledge for Canadians who participated in financial learning, by type of outcome

Figure 30: Percentage of Canadians who engaged in financial learning and their self-assessed improvements in financial knowledge, by age group

Tools and resources

FCAC provides a wide range of online tools for financial learning. One is Your Financial Toolkit, a comprehensive program that provides basic information and tools to help adults manage their personal finances and gain the confidence they need to make better financial decisions. This program also includes information tailored to subjects such as retirement planning, tax planning, insurance and estate planning. As well, for those seeking information on how to better prepare for or deal with specific life situations, FCAC has developed life events and your money.

VI. Estate planning, powers of attorney, credit reports, financial fraud and scams

This last section looks at Canadians' plans as they relate to estate planning and powers of attorney. It is important to note that some experts suggest reviewing your estate plan every 3 to 5 years or when there is a major change in your life circumstances. However, many Canadians do not appear to have up-to-date wills or powers of attorney. This section also explores Canadians' experiences with financial fraud and scams over the past 2 years.

Highlights

Half of all Canadians (55%) have wills, including the overwhelming majority (92%) of those aged 65 and older. For younger Canadians, it seems the challenge is creating a will in the first place; only 22% of those under age 35 have one. This is especially important for those with children or other financial dependents. For Canadians aged 65 and older, the bigger challenge may be ensuring that their wills and estate plans are up to date. Half (53%) have not updated their wills within the last 5 years.

About 40% of Canadians have powers of attorney drawn up. Similar to having a will, the likelihood of having a power of attorney increases with age: about 7 in 10 Canadians aged 65 and older (68%) have designated a power of attorney versus only 19% of those aged 18 to 34. Again, a challenge for all Canadians is to ensure that their powers of attorney reflect their current wishes; three quarters (75%) of Canadians have not updated their powers of attorney in the last 5 years.

While all Canadians are at risk of falling victim to a financial fraud or scam, consumers who are aware of the risks can better protect themselves. Thirty-eight percent of Canadians say they requested a credit report from Equifax Canada or TransUnion of Canada in the past 5 years; 22% had done so within the past 12 months. Those who checked more recently are more likely to consider themselves to have a bad or very bad credit rating (11% vs. only 3% of those who last checked their credit report more than 10 years ago). Half of Canadians (48%) say they have never requested a credit report from Equifax Canada or TransUnion of Canada. In general, this is often the case for those who believe their credit rating is either good or very good.

Further, more than 1 in 5 Canadians (22%) say they were a victim of a financial fraud or scam in the last 2 years. This figure was similar across all age groups. The most common form of fraud was the unauthorized use of a bank account or credit card, reported by 18% of Canadians. Other fraud or scams involved providing information by email or phone in response to a request that was later found not to be genuine (4%) or investing in a financial product that turned out to be worthless, such as a pyramid or Ponzi scheme (3%).

Estate planning and powers of attorney

Estate planning is an aspect of financial planning that can have an impact beyond your own lifetime. Having an up-to-date will is an important part of a financial plan to ensure your financial assets and debts are dealt with appropriately and in accordance with your wishes after death.

Half of all Canadians (55%) have wills. For Canadians under age 35, it seems the challenge is creating a will in the first place; only 22% have one. This is especially important for those with children or other financial dependents. On the other hand, the overwhelming majority of Canadian seniors aged 65 and older (92%) have wills. For seniors, the bigger challenge may be ensuring that their wills are up to date. Half (53%) have not updated their wills within the last 5 years. As noted above, it is considered good practice to review your estate plan every 3 to 5 years or when there is a major change in your life circumstances.
Figure 31: Percentage of Canadians with a will and when it was last updated

Text version: Figure 31 - Percentage of Canadians with a will and when it was last updated

Figure 32: Percentage of Canadians that have a will and have updated it within the past 5 years, by age group

Another important part of estate planning is having an up-to-date power of attorney drawn up. This is a legal document that gives one person the authority to manage another person's money and property on their behalf. The document establishes who will be responsible for you or your property if you are unable to manage on your own, even temporarily. In most parts of Canada, it is also possible to designate powers of attorney to give another person the authority to make health and other non-financial decisions for you. These documents are separate from powers of attorney for finances and property ( ESDC, 2013).

The likelihood of having a power of attorney increases with age: about 7 in 10 Canadians aged 65 and older (68%) have powers of attorney designated, compared with only 19% of those aged 18 to 34. Again, a challenge for all Canadians is to ensure that their power of attorney remains up to date. Three quarters of Canadians (75%) have not updated theirs in the last 5 years.
Figure 33: Percentage of Canadians with a power of attorney and when it was last updated

Figure 34: Percentage of Canadians that have a power of attorney and have updated it within the past 5 years, by age group

Credit reports and financial fraud and scams

This final section deals with credit reports and the extent to which Canadians are victims of financial fraud or scams. Every Canadian should be alert to these risks and know how to better protect themselves. Financial fraud can occur online or by phone, but also through in-person interactions, such as at shops or even when dealing with friends, family and neighbours.

More than 1 in 5 Canadians (22%) report being a victim of financial fraud or a scam in the last 2 years. This rate was similar across all age groups. These results are similar to those reported by Chartered Professional Accountants Canada in 2019, which stated that 19% of Canadian survey respondents had been victims of credit card fraud ( CPAC, 2019). The most common form of fraud was the unauthorized use of a bank account or credit card, reported by 18% of Canadians. Other fraud or scams involved providing information by email or phone in response to a request that was later found not to be genuine (4%) or investing in a financial product that turned out to be worthless, such as a pyramid or Ponzi scheme (3%).
Figure 35: Percentage of Canadians experiencing financial fraud or scams within the past 2 years

Requesting a credit report is one means consumers can use to verify that their financial affairs are in order. It enables them to track their credit usage and history, which can affect their ability to obtain a loan as well as the interest rate offered. A credit report also enables consumers to check whether their financial information is correct and can indicate if they have been the victim of identity fraud.

A credit score is a 3-digit number that is calculated using a mathematical formula based on the information in the credit report. You get points for actions that show you use credit responsibly, and lose points for actions that show you have difficulty managing credit ( FCAC, 2016b). Credit scores fall within a range of 300 to 900, with average scores ranging around 650 to 725. Overall, about 59% of Canadians said that their credit score rating is above average (good or very good), while about 7% said their credit score is below average (bad or very bad).

Given that a credit report can have an impact on access to products and financial services, it is a good idea for financial consumers to regularly check their credit reports for errors. Thirty-eight percent of Canadians say they requested a credit report from Equifax Canada or TransUnion of Canada in the past 5 years, including 22% who had done so within the past 12 months. Persons who had checked more recently are more likely to consider themselves to have a bad or very bad credit rating (11% vs. only 3% of those who checked their credit report more than 10 years ago). Half of Canadians (48%) had never requested a credit report from Equifax Canada or TransUnion of Canada. Other studies have also find that about half of Canadians have never checked their credit score ( BMO, 2015). Individuals who assume their credit rating is above average are less likely to check their score.
Figure 36: Distribution of Canadians self-reported credit score ratings

Figure 37: Percentage of Canadians who have requested a credit report and when they have last checked it

Figure 38: Percentage of Canadians who rate their credit rating as bad or very bad, by timing of latest credit report check

Tools and resources

Wills, powers of attorney and credit reports and scores

FCAC and other government departments provide a wide range of free online resources to get Canadians started on estate planning and help them to better understand their credit report and scores. For more information on estate planning, see FCAC's website on Estate planning, wills and dealing with death. To learn more about powers of attorney, see What every older Canadian should know about: Powers of attorney (for financial matters and property) and joint bank accounts. Finally, to learn more about improving your credit score, correcting errors, ordering your credit report and more, see Credit reports and scores.

Information on financial fraud and scams

A recent survey on banking in Canada found that many older adults are not aware of-or do not know where to find-information to protect themselves against financial fraud and scams. This was especially true for those aged 75 and older ( FCAC, 2019). To better protect Canadians and ensure they have convenient access to this type of information, the Canadian Bankers Association recently introduced the Code of Conduct for the Delivery of Banking Services to Seniors (Canadian Bankers Association, 2019). Along with a number of other government agencies, FCAC has also developed online resources to help Canadians learn more about financial fraud and scams, ways to minimize the likelihood of fraud, and steps to take if they suspect they have been a victim.

VII. Conclusion

This report provides results from the 2019 Canadian Financial Capability Survey (CFCS). It offers a first look at what Canadians are doing to take charge of their finances by budgeting, planning and saving for the future, and paying down debt. While the findings show that many Canadians are acting to improve their financial literacy and financial well-being, there are also emerging signs of financial stress for some Canadians. For example, about one third of Canadians feel they have too much debt, and a growing number are having trouble making bill, rent/mortgage and other payments on time.

Over the past 5 years, about 4 in 10 Canadians found ways to increase their financial knowledge, skills and confidence. They used a wide range of methods, such as reading books or other printed material on financial issues, using online resources, and pursuing financial education through work, school or community programs. Findings from the survey support evidence that financial literacy, resources and tools are helping Canadians manage their money. For example, those who have a budget have greater financial well-being based on a number of indicators, such as managing cashflow, making bill payments and paying down debt. Further, those with a financial plan to save are more likely to feel better prepared and more confident about their retirement.

The Financial Consumer Agency of Canada, along with a wide range of stakeholders and partners from across the country, provides numerous tools and resources to help Canadians meet these challenges and take charge of their finances.

To help Canadians who are facing financial pressures manage their debts and day-to-day finances, FCAC offers tools that can help them make informed decisions when planning to get a mortgage. For example, the Mortgage Qualifier Tool enables users to calculate a preliminary estimate of the mortgage they could qualify for based on their income and expenses. On top of this, the Mortgage Calculator Tool can help with determining mortgage payment amounts, and provides a mortgage payment schedule. In addition, FCAC also offers content that helps Canadians make a plan to be debt-free.

Because budgeting is crucial for many Canadians when it comes to managing their day-to-day finances, keeping up with bill payments and paying down debt, FCAC launched the Budget Planner in November 2019. This new interactive tool helps time-crunched or overwhelmed Canadians who may be having difficulties getting started with a budget. It integrates behavioural insights to help them build personalized budgets tailored to their unique financial needs and goals.

Having a financial plan is an effective way to start saving toward future goals and preparing for unexpected expenses. Financial stress can affect various aspects of life at home and at work. In response, FCAC created Financial wellness in the workplace to help employees and the self-employed cope with their unique financial challenges. Employers can use these tools to build financial wellness programs tailored to employees' needs. Canadians can also look to tools such as Your Financial Toolkit, a comprehensive learning program that provides basic information and tools to help adults manage their personal finances and gain the confidence to make better financial decisions. Module 10 of Your Financial Toolkit on how to calculate retirement income as well as the Canadian Retirement Income Calculator provide useful information about government retirement benefits, such as Old Age Security and the Canada Pension Plan. Finally, FCAC offers a number of tools to help Canadians achieve their financial savings goals, such as the Financial Goal Calculator. It is especially important to help Canadians with this facet of their finances given that saving behaviours are strongly related to financial well-being.

To help Canadians strengthen their financial literacy through financial advice and education, FCAC's online learning program called Your Financial Toolkit includes information on subjects such as retirement planning, tax planning, insurance and estate planning. Further, for those seeking information on how to better prepare for or cope with specific life situations, FCAC has developed web content called life events and your money.

Finally, to help Canadians get started with estate planning, powers of attorney and credit reports, and to better protect themselves from financial fraud and scams, FCAC and other government departments provide a wide range of free online resources. These can get Canadians started on estate planning and better understanding their credit reports and scores. For more information on estate planning, see Estate planning, wills and dealing with death on FCAC's website. To learn more about powers of attorney, see What every older Canadian should know about: Powers of attorney and joint bank accounts. Moreover, as noted above, many Canadians, especially those aged 75 and older, are not aware of-or do not know where to find-information on how to protect themselves against financial fraud and scams (FCAC, 2019). Along with a number of other government agencies, FCAC has developed resources to help Canadians learn more about financial fraud and scams, ways to minimize the likelihood of fraud, and steps to take if they suspect they have been a victim of fraud. To learn more about credit scores, correcting errors, ordering a credit report and more, Canadians should read Credit reports and scores.

Acknowledgements

The Financial Consumer Agency of Canada (FCAC) would like to acknowledge the excellent work of the Agency staff who arranged the 2019 Canadian Financial Capability Survey (CFCS), analyzed the data and reported the results. In particular, we would like to thank the following members of the Research and Policy Team: Christopher Poole, Mathieu Saindon, Michael Olson and Steve Trites.

FCAC also would like to acknowledge Susan Galley and Jake Daly at EKOS Research Associates for designing the survey methodology, managing the fieldwork and developing the dataset for the 2019 survey.

Lastly, FCAC would like to thank David Gyarmati, Boris Palameta, Cam Nguyen and Taylor Shek-Wai Hui from Social Research and Development Corporation for their valuable assistance with the redesign of the 2019 CFCS questionnaire. We also appreciate the important contributions of the following experts who assisted with an in-depth review of the 2009 and 2014 CFCS questionnaires, examined the implications of proposed changes, and provided refinement suggestions:

Adele Atkinson, Senior Policy Analyst, OECD; Fellow, University of Bristol

Allison Meserve, Senior Manager, Research and Evaluation, Prosper Canada

Annamaria Lusardi, Denit Trust Chair of Economics & Accountancy; Academic Director, Global Financial Literacy Excellence Center (GFLEC), George Washington University

Christina Kan, Professor of Marketing, Texas A&M University

David Rothwell, Professor of Social Work, Oregon State University

Elaine Kempson, Professor Emeritus, University of Bristol

Elizabeth Mulholland, Chief Executive Officer, Prosper Canada

Gary Mottola, Research Director, Investor Education, Financial Industry Regulatory Authority

Genevieve Melford, Director of Insights and Evidence & Program Director of EPIC, Financial Security Program, The Aspen Institute

Jennifer Robson, Professor of Political Management, Carleton University

Pierre-Carl Michaud, Professor of Economics, Department of Applied Economics, HEC Montreal

Victor Stango, Professor of Economics, Graduate School of Management, University of California

References

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Babiarz, Patryk and Cliff Robb (March 2014). "Financial Literacy and Emergency Saving", Journal of Family and Economic Issues 35(1).

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Bernheim, B. D., and Garrett, D. M. (2003). "The effects of financial education in the workplace: Evidence from a survey of households". Journal of Public Economics, 87, 1487-1519.

BMO (2015). "Out of Sight, Out of Mind: Over Half of Canadians Have Never Checked Their Credit Score".

Boisclair, D., Lusardi, A., and Pierre-Carl Michaud (2014). "Financial literacy and retirement planning in Canada", National Bureau of Economic Research, Working Paper No. w20297.

Burleton, D., Bushmeneva, K., and James Marple (2018). "Rising Debt Service Costs To Keep A Lid on Canadian Borrowing and Spending", TD Economics.

Canadian Bankers Association (2018). "Focus: How Canadians Bank". Abacus Data.

Canadian Bankers Association (2019). "Voluntary Commitments and Codes of Conduct for the Delivery of Banking Services to Seniors".

Chartered Professional Accountants Canada (2019). "Canadians express strong concerns about fraud: CPA Canada survey".

Canadian Payroll Association (2019a). "NPW 2019 Employee Research Survey, National Press Release Results".

Canadian Payroll Association (2019b). "Financial Stress in the Workplace Costs Canadian Economy $16 Billion Annually".

Canadian Mortgage and Housing Corporation (2018). "Mortgage and consumer credit trends: National report - Q2 2018".

Competition Bureau Canada. (2018). "Canada's progress in fintech: Regulatory highlights following the Competition Bureau's Market Study".

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Equifax Canada (June 2019). "Canadian consumers piled on their winter credit".

Federal Reserve Bank of New York (2017). "Increase in Unmet Credit Demand of U.S. Consumers; Consumers' Outlook for Future Credit Experiences Deteriorates".

Fernbach, P., Kan, C., and John Lynch Jr. (2015). "Squeezed: Coping with constraint through efficiency and prioritization", Journal of Consumer Research, 41, 1204-1227.

Financial Consumer Agency of Canada (2015). "Managing Money and Planning for the Future: Key Findings from the 2014 Canadian Financial Capability Survey".

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Financial Consumer Agency of Canada (2016b). "Understanding your credit report and credit score".

Financial Consumer Agency of Canada (2017). "Financial Literacy and Retirement Well-Being in Canada: An Analysis of the 2014 Canadian Financial Capability Survey".

Financial Consumer Agency of Canada (June 2019). "Sustained behaviour change through financial education: A budgeting longitudinal study using mobile technology".

Financial Consumer Agency of Canada (July 2019). "Highlights: Key findings from the Survey on Banking of Canadians".

Financial Consumer Agency of Canada (November 2018). "Backgrounder: Preliminary findings from Canada's Financial Well-Being Survey".

Fiksenbaum L., Marjanovic Z., and Esther Greenglass (2017). "Financial threat and individuals' willingness to change financial behaviour". Review of Behavioral Finance, 9: 128-147.

Gal, D. and Blake McShane (2012). "Can Small Victories Help Win the War? Evidence From Consumer Debt Management", Advances in Consumer Research Volume 40, eds. Zeynep Gürhan-Canli, Cele Otnes, and Rui (Juliet) Zhu, Duluth, MN : Association for Consumer Research, Pages: 187-190.

Hamilton H., Wickens C., Lalomiteanu A., and Robert Mann (2019). "Debt stress, psychological distress and overall health among adults in Ontario", Journal of Psychiatric Research 111:89-95.

Kaiser, T. and Lukas Menkhoff (2017). "Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?", The World Bank Economic Review, Volume 31, Issue 3, October 2017, 611-630.

Kaiser, T., Lusardi, A., Menkhoff, L. and Carly Urban (April 2019). "The Effect of Financial Education on Downstream Financial Behaviors", GFLEC.

Kempson, E., Finney, A., and Christian Poppe (2017). "Financial well-being: A conceptual model and preliminary analysis", Project note no. 3-2017.

Kettle KL., Trudel R., Blanchard SJ., and Gerald Häubl. (2017). "Repayment concentration and consumer motivation to get out of debt", Journal of Consumer Research, 43: 460-77.

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Lusardi, A., de Bassa Scheresberg, C., and Melissa Avery (2018). "Millennial mobile payment users: A look into their personal finances and financial behaviours", GFLEC Insights Report. GFLEC - The George Washington University School of Business.

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Pérez-Roa, L. (2019). "From good credit to bad debt: Comparative reflections on the student debt experience of young professionals in Santiago, Chile, and Montreal, Canada", Economic Anthropology, 6: 135-146.

Poloz, S. (May 2018). "Canada's Economy and Household Debt: How Big Is the Problem?", Speech to Yellowknife Chamber of Commerce.

Robson, J., and Andrée Loucks (2018). "Millennial Money: Financial independence and well-being for the next generation", Public Policy Forum.

Rothwell, D., and Shiyou Wu (2017). "The Impact of Financial Education Participation on Financial Knowledge and Efficacy: Evidence from the Canadian Financial Capability Survey".

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Statistics Canada (2018a). "Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, 2018".

Statistics Canada (2018b). "Tuition fees for degree programs, 2018/2019".

Statistics Canada (2018c). "Table 36-10-0587-01 Distributions of household economic accounts, income, consumption and saving, by characteristic (x 1,000,000)".

Statistics Canada (2019). "National balance sheet and financial flow accounts, first quarter 2019".

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Uppal, S. (2019). "Homeownership, mortgage debt and types of mortgage among Canadian families" Statistics Canada, Insights on Canadian Society.

Xiao J., and Barbara O'Neill (2018). "Mental accounting and behavioural hierarchy: Understanding consumer budgeting behaviour", International Journal of Consumer Studies 42: 448-59.

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Canadians and their Money: Key Findings from the 2019 Canadian Financial Capability Survey

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This report provides the latest insights on Canadians' knowledge, abilities and behaviours related to financial decision-making.

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This video explains how to live comfortably by yourself while earning minimum wage. She starts off the video by saying she isn't in school because she is paying off past school debt from an unfinished program. She is currently working minimum wage as a server and living by herself.  A big reason why she was able to do this was that while she was living with her parents she started saving for her future and saved $14,000. She noticed she was spending a large amount on unnecessary purchases so she changed her life around and became a minimalist. By becoming a minimalist she was able to save more money and make $4500 off of selling second-hand items (clothing jewelry, makeup). She stresses the importance of saving if you are able to because it can ease your financial stress and help you live comfortably. Her biggest tips aside from saving were living on a budget as it teaches you responsibility and to always have a "side hustle" such as a second job or a hobby you can make money off of. Her current side hustle is s YouTube channel.  I chose this video because it talks about a lot of younger people's price range. Usually to get a good-paying job you need post-secondary education so a lot of younger people work minimum wage jobs until they finish school or if they don’t go to school. I found this video to be interesting because it talked about different side jobs you could do such as babysitting, selling your stuff, etc. so you have funds to add to your emergency fund so you are not taking it out of your savings.  She also mentioned not neglecting yourself and if you need to you should spend money on yourself (ex. she bought a new, neutral wardrobe for $100 to minimalize).

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HOW I MANAGE TO LIVE COMFORTABLE MAKING MINIMUM WAGE

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This article provides financial tips for living on your own. It talks more about the process of moving into an apartment and how to financially prepare yourself. It is interesting because it recommends not buying too much house/space so you can save money and not spend over 30% of your gross income on all of your living expenses (mortgage/rent, utilities, taxes, repairs, etc.). It also mentions creating a list of what you need/your expenses and adding it to your budget. The main reason I chose this article though is that it discusses furniture and how to save for it because this is an expense most people wouldn't expect to be as expensive as it really is. It explains how you do not need everything in the first month and you should budget what you need, and its importance based on your income. It mentions helpful tips like taking furniture donations from family and close friends to save money especially if it is your first place because it can become very costly. It also suggests looking into estate sales or second-hand sales (craigslist/let go), and using coupons to get discounts on new items if needed.

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You've decided to live on your own for the first time, congratulations! Maybe you're moving out of your parents house, or moving out of living with roommates. Now, you get to decorate your new place exactly how you want and have everything match. The room is a bit bright so you'll get some curtains and... oh wait, curtains are over $1,000 for the room?! Welcome to the joys of furnishing your own place. No matter the situation, living on your own requires getting a lot of stuff. This doesn't even include the mortgage / down payment / deposit! Here are 10 financial tips for living on your own for the first time.

Don't Buy Too Much House

Top living on your own tip: don't buy too much house. Whether you are renting or buying, it's important not to buy too much house. If you spend too much money on rent or a mortgage you will not be able to cut back on this expense if money gets tight. What does this mean? It means that your housing costs should be no more than 30% of your gross income (pre-tax income). This includes rent, mortgage, taxes, bills like electricity, water and wifi and any repairs you may have to make.

Even though the rule of thumb is no more than 30% of your gross income the lower this percentage is, the more money you'll be able to spend actually furnishing your place and more money you'll be able to save.

See Also: How to Save Money in Your 20s

Organize Your Move

Being organized about your move will help save you money. Start by creating a few lists, including a to do list and everything your new place needs. In the "everything you need list" identify what you already have, what is needed, what is needed but can be purchased later and what is nice to have. For example, you'll need a lot of kitchen items but you'll absolutely need to have pots and pans to start if you plan to cook. While a good knife set is also needed if you're not a big cook this is an example of a purchase you can delay.

Also create a list of general household items (paper towels, cleaning supplies, spices) that you often don't think about because you've acquired a collection from living with your parents or living with other roommates over the years. You'll avoid a lot of repeat trips to the grocery store, Costco or Target by creating a list of what you need here before you go shopping.

Now that you know what you need immediately and what purchases you can delay match this to your budget. Likely, this is more expensive than you anticipated but see how far you can get. There are tricks you can use to lower these costs and make your money stretch further.

Spend As Little As Possible Moving

Moving from one place to the next is always a pain and spending money on the move itself is unavoidable. There are ways to minimize this expense; however, moving expenses and effort tend to be inversely related. The less you spend, the more effort you will have to put into the actual move. The least effort will be to hire movers that pack everything for you and unpack everything for you. On the flip side, the most effort but least expensive option is for you to move yourself in your own car. In the middle, there are options to rent a uHaul, ask for friends help and offer to buy them food, etc.

When you're moving to your own place for the first time it should be easy to minimize this expense as you have less stuff to begin with. At the same time, you will be spending money on moving after the initial move too as you begin buying more furniture for your place. Some of these purchases may require having to rent a truck or spending money on delivery fees.

Set A Budget For Furnishing Your Own Place

Living on your own can get expensive quickly. It's important to set a budget. Remember, you don't need to have everything day one. You need wifi, a place to sleep and a few household items like toilet paper and some food. It's ok if you don't have a kitchen table or look settled for a couple of months. You've just paid the big expenses of first month, last month and security deposit or perhaps the closing costs and downpayment on your first home / condo. You'll also have to start paying the monthly bills of living in your own place.

How much should you budget? That varies by person, and is really more about what you can afford and personal preferences. It's more important avoid going into debt than being settled day 1.

Accept Furniture and Household Item Donations from Family Members

Your first place doesn't have to look all put together - that can come with time. Forget what you see on Instagram, House Hunters and what your friends that don't have their own place suggest when they come to visit. Earmuffs and blinders are key here! When you move into your own place for the first time without any roommates it is expensive. Even getting curtains for one room can be hundreds of dollars, if not over $1,000.

Understandably not everyone has the option to get used items from family. But, if your parents or your aunts, uncles, grandparents, etc, have things you need, accept them. Even if they don't match or will need to be replaced soon it's better than nothing. You don't need to have these items forever, but moving into your own place requires a lot of things all at once and the fewer things you have to buy the easier it will be.

Are any of your friends moving? Or, are you living with roommates now and is there anything your roommates are trying to get rid of? Any time someone moves there are always items - big or small - that they won't want in their new place. It works out for both of you if you can take something off your friends hands they don't want anymore.

For the items that won't last long, add them to your list of things to buy in the future. Prioritize this list and throughout the year look for sales. Always set aside some money in your budget to purchase items for your house in future years.

Scour Local Estate Sales For Furniture and Household Item Deals

Finding deals on household items and furniture at estate sales is one of the best kept secrets. An estate sale usually happens when there is a death and the family is trying to sell almost everything in the house before putting the house on the market. You're able to get multiple things from one place at a steal and if you do need to rent movers or a uHaul, you can do it once. One friend ended up getting a $8,000 large dining room set in excellent condition for under $1,000. When she moved out (it didn't fit in her next place) she ended up selling it and made a profit!

You may end up spending the same money you would have for something brand new at Ikea but there are two benefits to buying furniture / household items second hand. First, the quality of what you're buying is much higher and you'll be able to command a higher value should you ever try to resell the same piece a few years later. Second, you don't have to self-assemble.

To find local estate sales, enter the town + estate sale into Google. If you live in a city, you may have more success looking at close suburbs.

Buy Second Hand Household Furnishings On Craigslist / LetGo

Craigslist and LetGo are also good to search for specific things you need to furnish your new place. I really wanted a wine rack from Crate and Barrel and didn't want to spend $400 for it new when I first moved into my own place. After regularly searching for a few weeks I found one nearby on Craigslist for $125. A few years later when I moved I ended up selling it for $150. Both of these website / apps are best when you know exactly what you're looking for otherwise you'll spend a lot of time browsing. The strategy of buying second hand can save you hundreds if not thousands of dollars.

Use Coupons For Household Staples and Decorations

Normally I don't talk about coupons often as I don't think it's worth going out of your way for 20 minutes to save $0.50. But, moving in on your own requires a lot of stuff so it's worth it to spend a few hours looking around for the best deals and setting alerts. In this case, you'll end up saving a lot of money by shopping around. Still, it is important to be smart about your time. If you see a good deal for one thing that will take 2 hours out of your day, is the amount you've saved worth those 2 hours?

T.J. Maxx and Homegoods generally has good deals and there are extra sales on holiday items after a holiday has passed. Bed, Bath & Beyond always mails 20% off coupons and you can try to split your transactions (or go with a friend) to use multiple coupons during the same trip. Usually, Bed, Bath & Beyond also accepts coupons that have expired. For higher end, Bloomingdales Home has Friend & Family sales (it's free to become a loyalist) which you can take advantage of for things like bed sheets and towels. Macy's also frequently has sales and coupons.

Budget Your Time Wisely

Don't spend so much time on searching for the best deal that you waste all of your time. Everyone only has 24 hours in a day and each hour you spend looking for deals you could have been using to do something else, including doing something that would make you more money. You have a lot to buy when starting your own household and shopping around can take you to many stores and require a lot of repeated trips if you don't plan correctly. Plan ahead as best as you can with lists and research ahead of time but never waste a couple hours to save only a couple of dollars.

You've Now Living On Your Own, Now What?

You're now officially moved in and living on your own. Now what? It'll always take some time to get settled and you'll realize you'll need things you completely forgot about. Don't worry about buying everything at once. Continue to keep your lists of prioritized needs, needs and wants. Chip away at these lists over time and take advantage of yearly sales. Do more research on when the best time to buy certain items are, which you can find here, and here.

Once you're more settled, look for other opportunities to be smart with your spending so you can get back to saving more money or finding ways to fund more of what you need for your home!

What are other ways you've found to save money when moving to your own place for the first time?

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10 Financial Tips for Living On Your Own

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You've decided to live on your own for the first time, congratulations! Maybe you're moving out of your parents house, or moving out of living with roommates. Now, you get to decorate your new place exactly how you want and have everything match. The room is a bit bright so you'll get some curtains and...

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This website broke down the average cost of rent, a meal, and transportation in big cities in many countries (Toronto – Canada, New York-USA, London-UK, etc.) and it showed that although Toronto may seem expensive it is cheaper than cities in other countries (ex. New York ($4323/month for rent)).  Then it broke down the cost of living in different Canadian cities such as Toronto and Montreal by comparing the rent to the salaries of individuals. It also broke down costs such as healthcare, dental, transportation, education, and the overall cost needed to live comfortably ($250000-$400000/year). I chose this website because it is relevant to 2020 and it is important for people to know they have options depending on where they want to live and their price range which they have to work with.

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Universal healthcare, a socially progressive government, a reputation for kindness and a geography perfect for hikers, skiers, sailors, photographers and urbanites alike. It's easy to see why so many people from around the world have considered moving to Canada.

If you're among those who have decided to take the plunge, one of the first steps is figuring how much it will cost to move, and how much it will cost to live once you get there. Whether you're retiring, temporarily relocating or moving to Canada for good, it's important to understand how different or similar your finances might look in the northern country.

This guide will walk you through everything you need to know about the cost of living in Canada, so you're ready to settle down in any of the country's six time zones.

Sending money to or from Canada? TransferWise could save you up to 8x versus your bank

Before you get started, a word.

Banks and money transfer providers often give you a bad exchange rate to make extra profits.

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Check out how to make your first transfer with TransferWise. And give it a try.

Oh, and while you're at it, check out TransferWise's free borderless multi-currency account. Where you can manage and send dozens of currencies all from the same account.

Now, back to what you came here to read.

How expensive is Canada in comparison to other countries?

One of the first things you'll have to consider when it comes to your finances is the exchange rate. How much the money from your home country will amount to in Canadian dollars and how far that gets you, but also what types of fees you might pay to convert your money. This becomes especially pressing if you'll still be earning income in your home currency, as you'll be faced with currency exchanges on a pretty regular basis.

Unfortunately, most banks and money exchange services tend to markup the exchange rate in order to increase their profits. By making money on the rate, they're able to keep their conversion fees low. This sneaky method can trick you into believing you're getting a good deal, but is ultimately pretty expensive. When you're converting your funds make sure to check a currency converter for the current, real mid-market exchange rate, and use TransferWise to seriously cut back on fees.

Once you've dealt with the currency exchange, you'll have a bank account full of Canadian dollars, typically just referred to as just as dollars or by their slang name, "loonies." While in Canada it's most common to denote money with just a dollar sign ($), it's sometimes written as C$ or Can$ to distinguish it from other dollar-based currencies. It's also sometimes written as CAD.

The list below shows the approximate value of Canadian dollars at the time of writing, compared to a few major currencies:

Additionally, the following chart compares some basic costs (in Canadian dollars) across Canada and four major countries, to give you an idea of general pricing for day to day expenses.

Comparing basic cost of living

1 bedroom flat in city centre (monthly rent)

Meal for 2 (mid-range restaurant, three courses)

Transportation (monthly pass)

What are the most expensive and cheapest major cities?

Cities across Canada can vary widely in how expensive they are. The following table lists the top five most expensive cities to live in in Canada.

1. Vancouver, British Columbia

2. Toronto, Ontario

3. Victoria, British Columbia

4. Calgary, Alberta

5. Hamilton-Burlington, Ontario

What are general living expenses like in Canada?

What are the average salaries in Canada?

With the cost of living in mind, the other major financial consideration is how much you'll make. Depending on where in Canada you choose to settle, your salary could differ massively as employers compensate for the cost of their city. If you're not planning to keep your job back home, the following tables will give you an idea of what kind of salary you can expect in your industry in Toronto or Montreal.

How expensive is housing and accommodation in Canada?

No matter where in the world you move, rent is always going to be one of the biggest items in your budget, typically taking up 35% to 50% of your monthly expenses. The following tables detail rent prices across three of Canada's biggest cities.

What about healthcare and dental costs in Canada?

One of Canada's major attractions is the free healthcare system, meaning you won't pay any direct fee for doctors' visits, the dentist, getting your eyes checked, going to the emergency room, or any other medical visit.

As with the majority of countries with this type of healthcare, it's funded by the country's tax system. The average person pays about C$4,222 per year to maintain the no-cost system, while a family of four pays about C$11,735. Though taxes at that level can seem pretty high to foreigners, all in all Canadians mostly agree it's not too much to pay for the relatively limitless healthcare system, as they're able to maintain relatively good health.

How much does travel and transportation cost in Canada?

Much like their southern counterparts in the U.S., Canadians tend to drive everywhere. That being said, the popularity of biking to work is increasing. In fact, some neighborhoods in Halifax, Vancouver, and Quebec City see 20% of commuters getting to work by bike, though this statistic dips significantly through the cold winter months.

In major cities it's also fairly common for residents to use public transport, buses and trains, though automobiles remain king in the Canadian commute. It's also worth noting the prevalence of air travel, as Canada is a large country and cars and trains don't suffice for some longer trips, especially coast to coast.

How much does education cost?

Like most other countries, Canadians enjoy a free public school system for children up to age 18. For higher education, prices in Canada are relatively low compared to universities in the U.S., though they're somewhat less affordable than European countries where universities are often subsidized by the government. The following table will give you an idea of education costs in Canada.

Canada has always been known as a great place to live, and depending on where you choose to settle you may find the country very cheap for the relatively high quality of life. Even in the largest cities, Canada tends to be more affordable than most European cities, and they don't even have Tim Horton's, hockey or mounties.

No matter where in Canada you decide to live, good luck with your move!
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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Universal healthcare, a socially progressive government, a reputation for kindness and a geography perfect for hikers, skiers, sailors, photographers and urbanites alike. It's easy to see why so many people from around the world have considered moving to Canada.

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The final website I chose was an article from the Greater Toronto Real Estate Corporation. The website examines the difference between buying and renting and looks at the advantages/disadvantages of both, real-life examples of the cost of living in the same house in both scenarios, and reasons to help you decide if renting or buying is more suitable for you. I included this article because I felt it was important as both renting and buying are options when moving out on your own depending on what you are looking for.  I found this website to be helpful as it was very clear and informative, this could be used for individuals who are moving out on their own but are unsure of whether they would like to buy their own house or rent depending on their lifestyle and price range.

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Tired of renting? Thinking it might be a better idea to buy a home? The Rent vs. Buy debate is a big one...and there isn't one right answer for everyone. Read on for our thoughts on renting in Toronto vs buying in Toronto.

The Advantages of Renting a Home

Minimal Maintenance Hassles and Expenses - when the toilet gets plugged, tenants get to call their landlord. It's not nearly as much fun when it happens in your own home (trust me).

One Easy and Predictable Payment - owning a home involves more than just paying your mortgage. You need to factor in property taxes, maintenance, condo fees, water and sewage bills for houses, utilities, home insurance, etc.

Not happy with your neighbourhood? You can move every year. Tenants have the ability to easily and affordably move every year if they want to; the real financial benefits of owning happen over time. If your time horizon is short or you're a commitment-phobe, consider renting instead of buying.

It's cheaper to move when you're renting. Buyers have to pay land transfer taxes when buying, commissions when selling and legal expenses for both.

Sometimes it's cheaper to rent. On a monthly basis, your overall expenses will often be cheaper when renting instead of buying. That's especially true if you don't have much of a down payment. But of course...when you rent, you're paying down someone else's mortgage instead of your own.

The Advantages of Owning a Home

You're paying your own mortgage instead of someone else's. While part of every mortgage payment is interest paid to the bank, part of every mortgage payment goes towards building equity. Think of it as a forced savings program.

If property prices go up, you reap the rewards, not your landlord. Of course, that works in reverse too - if prices go down, the hit is to your pocketbook if you decide to sell.

Sometimes it's cheaper to buy. Toronto's rental market isn't easy or cheap, especially if you're looking to live downtown. If you have a decent-sized downpayment, it could be cheaper to own than to rent (on a monthlly cash flow basis).

Freedom! When you own your home, you don't have to ask permission to paint the walls or upgrade the floors - do as you wish! Buy new appliances, replace that carpet, paint that wall red and make your home your own.

Where else will you put your money? One of the reasons that so many investors make real estate a large part of their portfolio is that historically, Toronto real estate has been more predictable and yielded better returns than many of the investment alternatives. Of course, there aren't any guarantees, but if you're renting and blowing the rest of your money on lattes and trips to Cuba, buying will be a better long-term financial plan (sorry Starbucks).

Real Life Example: Rent vs. Buy
Property: 36 Lisgar Street

1 bedroom

660 sqft

Can rent for $1,650/month (July 2017)

Can buy for $345,000 (July 2017)

Costs to Rent

Monthly rent: $1,650

Monthly hydro: $50

Monthly insurance: $30

Total Monthly Rental Costs: $1,730

Costs to Own

Downpayment: $34,500

Costs to Buy: $2,192 (land transfer tax after first-time buyer rebates + legal fees)

Mortgage: $1,465/month (assuming 10% downpayment at 2.69% interest with a 25-year amortization)

Condo fees: $422 (includes heat and air conditioning)

Hydro: $50/month

Property taxes: $1,965/year

Insurance: $1,500/year

Total Monthly Costs $2,225

Conclusion: It costs an extra $495 per month to own. But of course, it's not that simple.
Let's assume that the Tenant and the Owner live in the condo for 5 years. At the end of that time period....
The Tenant:

Will have paid $102,000 in rent/hydro (assuming no rent increase - usual rent increase is 2% per year)

They will have increased their landlord's equity in the property by almost $40,000, but will be walking away with nothing

The Owner:

Will have paid $130,500 (mortgage, condo fees, taxes, insurance, hydro)

Increases their equity by $39,108 by contributing to paying off their mortgage (the rest of their monthly payment goes towards interest)

Price appreciation if they sell: $176,650 (based on actual average condo price appreciation of 51.2% in Toronto from June 2012 to June 2017)

Net Proceeds from the Sale after 5 years

Sold Price: $521,650

Costs to Sell: $26,082 (assumes 5% for commission + legal fees)

Remaining Mortgage after 5 years: $271,293 (from original $310,500 mortgage)

Net Proceeds: $224,275

Conclusion: The Owner walks away with over $187,000 more than they initially invested.
Of course, it's never that easy. Other things to consider:

The Owner paid an additional $28,500 in carrying costs.

The Renter could have chosen to invest the initial $34,500 downpayment + $495 per month saved in lower monthly costs and earned a return on that $$

The condo price appreciation can vary significantly depending on the period

rents generally edge slowly up, as do owner expenses, including potential maintenance costs (e.g. a broken fridge)

So Who Should Keep Renting?

If you fall into any of these categories, it might be a better idea to rent instead of buy:

You don't have a down payment. Critical to the math is having a downpayment- click here to read about Saving for a Downpayment.

You like zero risk. With risk comes return, but there are never any guarantees that prices will go up.

You don't know where you'll be in 3 or 5 years. Generally, the longer you live in the property, the easier it is to break even or make money. If the market declines and you have to sell because you're moving out of the city, you could be taking a loss on your investment. If you might be moving to Paris next year, it probably makes more sense to keep on renting.

You can't afford something you want to live in. Most first time home buyers gravitate to condos for affordability reasons....but if you MUST live in a house, you need to consider the significantly higher purchase prices and the inevitable maintenance and renovation costs.

You Should Buy if...

You can afford to buy a property in a location you are happy with, that will appreciate over time, and still have enough money to live. Never borrow as much as the bank is willing to lend you, you'll have no wiggle room.

You want to pay your own mortgage instead of someone else's. Investing in yourself is not just empowering, it's often the best financial move you can make.

You see real estate as more than investment - it's a place to lay your hat and live your life. That it can increase your net worth? Just a bonus.

I still remember the day I decided to get into the real estate market and stop renting. I was 27 years old and hadn't even considered a career in real estate yet. I was living in a dumpy apartment at Queens Quay and Spadina and paying $1,300 a month in rent. At the time, one bedroom condos at King/Niagara were selling for - wait for it - $150,000-$200,000. When my friend Lisa suggested I might be better off buying, I was surprised. I was single and scared, but I went for it. Getting into Toronto's real estate market early was one of the best financial decisions I've ever made (and I never missed that dumpy apartment).

If you want to discuss whether you should buy or rent, give us a call or send us an email. There is no one answer to the question, but we'd be happy to help you evaluate your options.

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Renting vs. Buying in Toronto: What's Right for You?

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Tired of renting? Thinking it might be a better idea to buy a home? The Rent vs. Buy debate is a big one...and there isn't one right answer for everyone. Read on for our thoughts on renting in Toronto vs buying in Toronto.

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1. What did you learn about your topic that surprised you the most?
When working on this project, what surprised me the most was learning about the costs of various cities throughout Canada. It really opened my eyes to how expensive Toronto and Vancouver are and has made me consider not moving to a bigger city as this can be more costly by a very large difference. It also surprised me because I always thought Toronto was very expensive compared to other countries but that is not the case and out of the list of large cities in other countries Toronto was one of the cheapest for the cost of living.

2. Provide a real-life example of how this topic is relevant or interesting for you
This topic is relevant to me because once I graduate next year I will be moving out of my house and living on my own, the research I have done has made me think critically about things I need to take into consideration such as buying furniture or saving for retirement. It was also useful to read about budgeting and helpful strategies and apps to save money. It was reassuring though because I could relate to multiple videos as I have been saving money while I live with family, I am always working a side job, I have sold my stuff for extra income, and I have lived off of minimum wage before.

3. If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?
I feel like the most important thing about living on your own is learning how to be mindful of your spending habits and to be able to track your spending so that you are able to live a more comfortable and stress-free life. The most important information and tip I would pass onto my family and friends is the 20/30/50 rule as this is a smart approach to being responsible with your money and budgeting and is not hard to understand at all.