With COVID-19 case numbers on the rise across most of the country and some Canadians worrying about their jobs, it should come as no surprise that we’re paying closer attention to our spending, according to the findings of a recent Scotiabank survey.
There is a bright side: the lockdown has been a windfall of a sorts for those who can work from home — gone are lunches out, shopping for business attire and the cost of the commute to the office.
A majority, or 79%, of respondents to the 2020 Scotiabank Money Readiness Poll said they are being more cautious with their spending, while 25% say they have been able to save more because of reduced discretionary spending on eating out (75%), entertainment (81%), clothing and apparel (58%), and commuting costs (41%).
Among those who reported being able to save more, 61% said they are setting it aside for an emergency, 34% said they are topping up investments, 29% are using it to pay down debt and 26% are saving for a big purchase.
The shift in Canadians habits away from spending and into saving and investing has made some people feel less anxious about their finances during the pandemic, with about 41% of those responding to the Scotiabank poll saying they feel better prepared financially to weather the pandemic, compared to 35% just six months ago.
“The pandemic has prompted many Canadians to reassess their personal finances and short-term priorities, shifting how they manage their money and reaching out to a financial advisor for help planning for whatever uncertainties lay ahead,” said D’Arcy McDonald, SVP, Day to Day Banking, Retail Deposits & Investments, Advisor Deposit Services at Scotiabank.
How will Canadians’ budgets fare with the holidays just around the corner? Fully 88% of survey respondents expect the pandemic to change how they celebrate Christmas, and not solely due to restrictions on the number of people allowed to gather in one home.
The Scotiabank survey found that 39% of Canadians plan to spend as much this season as they always do, while 43% said they would be hard-pressed to find the extra cash this year. Other financial priorities will curb the spending of 56% of respondents, while roughly 30% plan to splurge more than usual with the money saved during the pandemic.
If you haven’t gone over your expenses and income in the past few months, now may be a good time to take stock. Here are some ways to do that:
- Determine how much can you put aside. That number could be more than you think eight months into a pandemic. Start by calculating monthly expenses such as rent or mortgage, utilities (these could be higher as winter sets in), and update items such as transportation costs, groceries, child care, and entertainment. On the income side, be sure to include tax refunds and bonuses. Even $20 a month will make a big difference to your savings over time.
- Schedule automatic deposits and then forget about them. Make it easy on yourself by pre-authorizing scheduled deposits to your emergency fund so you don’t get sidetracked by spending the money elsewhere.
- Get your money working for you. Whether you’re saving for retirement or building a nest egg, having the right investment strategy is essential to growing your money. There are plenty of options to help you increase your nest egg from tax-free savings accounts, to registered retirement plans and guaranteed investment certificates. Choosing the right vehicle will depend on your situation.
For more information, visit the ScotiaAdvice+ Centre or contact a Scotiabank advisor.
Methodology: The 2020 Scotiabank Money Readiness Poll was conducted by Maru Blue on Oct. 7, 2020. A total of 1,511 surveys were collected from a random sample of panel members across Canada