TORONTO, March 30, 2015 /CNW/ - Many Canadian households do not feel threatened by today's unsettled economy yet they are vulnerable because of high debt levels, according to research conducted for Chartered Professional Accountants of Canada (CPA Canada).
With a sharp decline in oil prices and other signs of a weakening economy, CPA Canada commissioned a public opinion poll in the winter of 2015 as a follow-up to a similar survey conducted in the spring of 2014. The research allowed the organization to gauge if Canadian households were viewing their financial positions differently amid the increasing economic uncertainty.
The survey found that Canadians on a whole feel that they are doing alright financially and living comfortably despite the unsettled economic climate. Canadian households also rate themselves highly in terms of financial discipline but they are not taking action to plan for potential changes in the economy.
"It may be a matter of perception," says Kevin Dancey, FCPA, FCA, president and CEO, CPA Canada. "Factors such as lower interest rates, cheaper gas and a strengthening U.S. economy may have some people thinking things are just fine. However, no matter what happens with the economy over the coming months, the lingering issue of high debt levels cannot be ignored."
The report reveals a number of troublesome findings:
- More than half (53 per cent) of non-retired households said they did not save on a regular basis even though the majority (65 per cent) of all households assessed the level of their financial discipline as somewhat or very strong
- Only 60 per cent of households with debt said they paid off a portion of their debt on a regular basis
- A mere 16 per cent expected a negative change in their personal financial situation because of the changing economic outlook
- Over half (51 per cent) of non-retired households said they do not have special reserve fund for unexpected financial emergencies (in additional to regular savings for other purposes)
Of course, households in some regions felt more vulnerable than others. In Alberta, 34 per cent of respondents said that their personal financial situation would worsen due to changes in economic conditions. This is highly likely due to the lower oil prices affecting the province.
The CPA Canada report underscores the need for Canadians to get a better grasp of their financial situation.
"Canadian households must pay attention to economic indicators in order to protect themselves against future financial shocks," says Joy Thomas, FCPA, FCMA, executive vice president, CPA Canada. "Achieving wide-spread behavioural change won't be easy and may require a broad-based, open national dialogue involving governments and other stakeholders to develop effective solutions. We are pleased that the federal government appointed Jane Rooney as Canada's first Financial Literacy Leader in an effort to help Canadians save more, spend less and reduce debt."
For more information about the report, visit www.cpacanada.ca/debt
About CPA Canada
Canada's accounting profession is uniting under a new single designation, Chartered Professional Accountant (CPA). The profession's national body, Chartered Professional Accountants of Canada (CPA Canada), represents and supports more than 190,000 members across the country. CPAs are valued for their financial and tax expertise, strategic thinking, business insight, management skills and leadership. CPA Canada has consolidated the operations of three national accounting bodies: The Canadian Institute of Chartered Accountants, the Certified General Accountants Association of Canada and The Society of Management Accountants of Canada. CPA Canada conducts research into current and emerging business issues and supports the setting of accounting, auditing and assurance standards for business, not-for-profit organizations and government. It also issues guidance on control and governance, publishes professional literature and develops certification and continuing education programs.
SOURCE CPA Canada
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