Are Emaciated Canadian Piggybanks Today's Reality?

74% of Canadians worry they're not putting enough money into savings; 85% feel living paycheque to paycheque is the new norm; 78% likely to put less into savings in 2025, reveals new H&R Block study.

• 74% of Canadians worry they're not putting enough money aside into savings
• 66% worry about their future financial well-being as they're not putting enough money aside.
• 7% of paycheques is the average amount put towards saving versus cited 20% rule of thumb.
• 65% expect a tax refund this year.

CALGARY, AB, April 2, 2025 /CNW/ - A new survey from H&R Block Canada reveals an elevated level of concern among Canadians around being able to build a savings nest egg. While the general rule of thumb is that 20% of your paycheque should go into savings, the new study reveals that the average among Canadians is drastically lower at 7%. One in ten Canadians (10%) say their paycheque doesn't even cover the cost of living. Only 18% report putting around 20% or more of their paycheque into savings, while 21% report putting around 10% into savings, and 25% put around 5% of their paycheque into savings.   

"While many Canadians hold a mix of tax-friendly savings accounts, it's clear that Canadians are feeling the financial strain of not having enough money left from their paycheque to put into savings, given the high cost of living", said Yannick Lemay, Tax Expert at H&R Block Canada. "The good news is that 65% of Canadians expect a refund this year, up from 36% last year, of which a significant portion is likely due to investing in tax-friendly savings plans such as RRSPs."  

Mixed sentiment around ability to live within financial means: Overall, 54% of Canadians feel good about their current personal financial situation, compared to 46% who are not feeling positive. More than half of Canadians (51%) say that despite making a decent salary, it's hard to make ends meet, and 81% are concerned their income is not keeping pace with the cost of living.  

Savings are taking a hit: Overall, 74% of Canadians worry they're not putting enough money aside into savings. Nearly a third (62%) feel they don't have enough money left over from their paycheque to build up their savings.

Perceived new reality of living paycheque to paycheque: When thinking about the prevailing culture of saving in Canada, a whopping 85% feel that living paycheque to paycheque is the new norm. This is up from 60% who said they felt that way in a similar H&R Block study from 2024.

Outlook on savings: Looking ahead, 78% say they're likely going to have less to put into a savings account in 2025, given the high day-to-day cost-of-living. Nearly half of Canadians (46%) say they're unable to save money for long-term goals like retirement or a home, as their paycheque goes to their immediate needs. One in three Canadians (33%) feel they may as well enjoy spending their money as buying a home feels out of reach for the foreseeable future. 

Canadians say they can't rely on savings for unexpected expenses: Nearly half (48%) of Canadians rely on their credit card to make larger purchases versus tap their savings, and 17% instead rely on installment payment options including buy now pay later (BNPL). More than half of Canadians (56%) worry that they'll have to go into debt or use a credit card if an unexpected expense comes up rather than rely on their savings; for example, to replace an appliance, home repair costs, dental costs, etc.

Canadians' top 3 motivations to save include covering unexpected expenses, avoiding taking on debt, and planning for retirement: Canadians cite a mix of motivations in wanting to be able to put money into savings, including:

• For unexpected expenses: 72% 
• To avoid borrowing more money using a credit card or loan: 68% 
• Put towards retirement: 59% 
• To earn interest in a savings account: 47%  
• To splurge on something down the road for themselves such as a vacation, new car, or something they want to treat themselves to: 43% 
• Save towards buying a home: 19%  
• Among those who are mainly focused on putting money aside to buy a home, there's a big disparity among age demographics:
  • 18-34 year-olds: 46%
  • 35-54 year-olds: 16%
  • 55 plus: 4%

Canadians embrace tax filing to put money back in their pockets:  Many Canadians are embracing this tax season as a means to put money back in their pocket. Overall, 65% say they expect a tax refund this year, of which 35% expect it to be the same or more than last year. However, a large number of Canadians have no idea if they will get a refund. More than 1 in 3 (37%) do not feel they have a good understanding of all the hundreds of tax credits and benefits they may be eligible for.  

Canadians hold a mix of tax-friendly retirement and savings accounts: While many Canadians say they're struggling to put money into savings, they hold a mix of saving and retirement related accounts and plans that they look to put money left over at the end of the month into:  

• Tax Free Savings Account (TFSA): 52%
• High interest savings account at the bank or credit union: 45%
• Registered Retirement Savings Plan (RRSP): 35%
• First Home Savings Account (FHSA): 5%
• Keep some cash at home: 14%

"Beyond building up saving for your long-term financial security, putting money into tax-friendly savings helps reduce your taxable income and puts money back in your pocket, said Lemay. "For example, let's say you earn $70,000 annually and you contribute $10,000 to your RRSP, you reduce your taxable income to $60,000. If we assume an 30% tax rate, you save $3,000 in tax while benefiting from building savings. Similarly, if you put the annual of $8,000 into an FHSA, on an income of $70,000 you would save about $2,400 in tax savings. If you to do both, your total tax savings would be $5,400 in your pocket."

H&R Block points to top tips to help put money back in your pocket while building a savings nest egg:   

• First Home Savings Account (FHSA): Implemented in 2023, this federal program helps Canadians save towards their first home, allowing up to $8,000 a year in contributions and up to $40,000 over plan lifetime. Like an RRSP, contributing to an FHSA can reduce your taxable income. When money is withdrawn for purchasing a first home, it's tax-free.
• Registered Retirement Savings Plan (RRSP): Money contributed to an RRSP is tax-deductible so it lowers taxable income for that year. The 2024 contribution limit is up to 18% of income. You can make withdrawals anytime, though they are taxable.
• Tax Free Savings Account (TFSA): TFSAs help you build savings without paying taxes on income generated through investments made within your TFSA account. The maximum contribution increased to $7,000 in 2024.
• Other tax-friendly savings accounts Canadians may qualify for. There are a multitude of tax-friendly savings plans and funds that Canadians may be eligible for including Registered Education Savings Plan, Registered Disability Savings Plan, Workplace Pension Plans and Pooled Registered Pension Plans.

About the survey: The online survey commissioned by H&R Block was conducted by H&R Block in French and English from February 12-13, 2025, among a nationally representative sample of 1,790 Canadians members of the Angus Reid Forum. For comparison purposes only, samples of this size would yield a margin of error of +/- 2.3 percentage points at a 95% confidence level.

About H&R Block Canada: A trusted partner of Canadians for 60 years, H&R Block Canada is Canada's tax leader. Serving almost 1,000 locations across Canada, H&R Block's team of Tax Experts use the latest in technological advances combined with real-world expertise to help people file taxes in office, through drop off service, upload their documents remotely, or use do-it-yourself Tax Software. H&R Block Canada can support in the preparation of personal, small business, corporate, U.S., rental, and estate taxes. H&R Block's comprehensive education program, Tax Academy, trains new experts and ensures our Tax Experts continually update their skills. Learn more at www.hrblock.ca or 1-800-HRBLOCK. 

SOURCE H&R Block Canada Inc.

For Further information: Katie Duffy, H&R Block (c/o Ketchum), 647-772-0969, [email protected]