A new study from the Certified General Accountants Association of Canada* shows that Canadians “are among the most reckless spenders in the developed world.” Recently many Canadians have thought that Canada is doing really well compared to other developed nations. The American economy and housing market has fallen hard, Britain’s economy has been hammered by the recession, Iceland’s financial system has imploded, and now Greece is being bailed out by the rest of Europe. Many Canadians have felt that Canada is different from the rest of the world. While others have been reckless, we have been much more cautious and prudent. This new study by the Accountant’s Association seriously challenges this kind of thinking.
The CGA Associations claim that while the rest of the world has been cutting back their spending, Canadians have continued to spend and have financed their spending with more borrowing. They point out that for every dollar Canadians spent on buying cars in mid-2008, 39 cents was borrowed. However, by the end of 2009 Canadians were borrowing 75 cents for every dollar they spent on buying cars. The CGA Association claims that Canadian debt compared to assets is now higher than troubled countries like Greece. This study should be a wake up call to Canadians that our financial situation isn’t all that different from that of Greece or the United States. If Canadians don’t balance their personal budgets and begin to pay down their debts, then each of us could end up in our own personal financial crisis.
To help Canadians better manage their debt, we have created a number of great resources including 12 Ways to Get Out of Debt and 7 Ways to Protect Yourself from Rising Interest Rates. If you would like to learn how to balance your budget or learn how to create one, click here.
* Source: http://www.cga-canada.org/en-ca/ResearchAndAdvocacy/AreasofInterest/DebtandConsumption/Pages/ca_debt_default.aspx