Saving Can be Cool Again

Deborah K. Vick

Let’s agree on the definition of “Save”

Have you ever wondered how Canadians save? According to Webster’s dictionary, the term “save” means to keep and store up (something, especially money) for future use.

Saving Difficulties

Most Canadian households overlook the importance of saving and withdrawing money to pay for unexpected expenses or incur debt. Even though we know that we should have separate bank accounts for savings and daily expenses, it can be extremely difficult to put a certain percentage aside, even though it’s only a fraction of our gross income. This is as common as it is short-sighted. There’s no finger-wagging here though; This is something that we all fall prey to at some point or another.

Canadian Making it Rain

The average Canadian, when they receive a deposit of funds from their annual salary, especially if it’s their first one in a while, may treat it as disposable income instead of making a contribution to a registered retirement savings plan (otherwise known as RRSP accounts or RRSP contributions), investment portfolio, or tax-free savings account (often referred to as a TFSA).

The Bigger Picture

Statistics Canada recently examined savings growth across Canada. Analysis of these statistics to identify pivotal economic and political issues allows pundits and economists alike to be able to forecast and course correctly for the Canadian economy.

When Canadians save more each year, albeit for a down payment, a retirement savings plan, or towards personal savings, compared to times when those fiscal trends are not happening, it identifies the larger fiscal trends at play.

In broad terms, when the majority of Canadian households have the opportunity to put money away into savings, it’s usually a good indication of the nation’s economic health.

How much do Canadians save each year?

Statistics Canada said the average Canadian household had an average net savings of around $9,972 for the 2021 year. Compared with their peers, 45% fewer people had less than $49,000 in savings per household.

Let’s Go Micro

Looking at things on more of a macro level, Canada is currently saving 7.61 percent on its own by excluding taxes on rent and the costs associated with living necessities like food and transportation. A 6.71% annual income for Canadian households would give us an approximate $413 CAD in savings.

How Do Canadians Stack up in the World

In looking at 2020 statistics comparing household debt to the percentage of disposable net income through, the results were very surprising.

Household debt is defined as all liabilities of households (including non-profit institutions serving households) that require payments of interest or principal by households to creditors at fixed dates in the future.

Debt is calculated as the sum of the following liability categories: loans (primarily mortgage loans and consumer credit), and other accounts payable.

By using this methodology, Canada ranked ninth in terms of the highest household debt-to-disposable income ratio at 186%. The top five were as follows:

5) Australia-203%

4) Netherlands-222%

3) Switzerland-222%

2) Norway-241%

1) Denmark-248%

Factors Influencing Higher Savings in Canada

It may be best to think of financials as cyclical, if not symbiotic.

We know that the macro-economy, broadly speaking, is healthier when people are saving. The more that Canadians saved as compared to the previous year, the better the financial forecast as a nation.

When we turn our minds to it, it stands to reason that when the economy is healthy, an individual person pays more into their savings as they’re not stretching their dollar as much.

We can then say that macroeconomics will foster a relationship with a citizen’s bank account. To put it another way, those trends we see in the larger economy will often ripple down to the individual level.

What’s the impact of COVID-19?

According to in the article entitled, The Long Economic Hangover of Pandemics, historically speaking, pandemics are followed by sustained periods—over multiple decades—with depressed real interest rates.

There certainly appeared to be a bit of a boom during the pandemic as households were saving on commuting costs and many businesses were saving on operating costs (although somewhat mitigated by a widespread decrease in revenue).

We’re now seeing the fallout from that in the form of supply chain issues, and a dramatic increase in the cost of living. This spells bad news for people who are already over-leveraged.

The Bank of Canada reports that global inflation remains high, with measures of core inflation on the rise in most countries.

In response, central banks around the globe continue to tighten their monetary policy.

What this means for the average Canadian is that if you were over-leveraged during the pandemic, the cost of items needed for day-to-day life has increased, while the cost of borrowing money has also increased.

What Do I Save?

The recommendation on the amount of savings depends largely on what you plan to spend the money on and how soon you need the funds.

Another consideration is also the cost of borrowing. Whether you are saving for a downpayment for a house, purchasing a new car or retirement savings contribution, each of those will all have different costs associated with them, so you’ll want to really do your research.

Four Kinds of Savings

  • The Emergency Fund. This is the “Do Not Touch”fund unless it’s an ‘in case of glass’ type of situation.
  • I can touch this fund. This is for things you know are going to happen (e.g. replacement of brakes or need a new roof), but just not every month.
  • I Know What I Want, I Just Need to Pay for it Fund. This kind of savings is for a specific goal or purchase.
  • Long-term Savings.

When Should I Save?

The answer to this question is always now. Although some people may say, “the sooner the better, which isn’t wrong.

However, since we haven’t perfected time travel yet, let’s let go of the guilt of what we should have, would have, or could have done, in the past and just put our best foot forward for the future.

Why Should I Save?

Here are some reasons why you may want to save your hard-earned money:

  • To fund future investments. A dollar saved and invested today may be worth much more tomorrow.
  • With a specific goal in mind such as to fund a future life event such as rent, tuition, or your dream wedding.
  • To provide a safety net in case of unforeseen incidents. i.e.. surgery, cancer, a lawsuit, or a set of triplets. In life, you never know!
  • To fund big-ticket purchases. Maybe you are saving for a family vacation, A posh car, or the latest tech.
  • Employers match- One great reason to save is when you have someone helping you to do so. An employer-matched RRSP is a retirement savings plan where you make a contribution and your workplace may match it entirely or the company contributes a smaller portion; either way, it’s money in your retirement pocket.

How Do I Know How Much I Need to Save?

Above and beyond saving up to buy something specific, it’s also highly recommended that one have enough financial cushion to provide emergency funds for any financial obligation that could arise unexpectedly.

Some expert opinions expressed suggest saving between three to six months of your salary for this.

Retirement Saving Rules of Thumb

Historically, people have used the “70% rule,” which suggests you could live comfortably in retirement on 70% of your pre-retirement income.

However, because people are now living longer and are retired for longer, 70% might not be enough.

Another rule of thumb is to save 10% of your net income. While it’s a nice idea, while you’re paying down a mortgage or student loan, and raising children, it may be difficult.

As well, the 10% rule may not factor into your lifestyle. Some folks might need to save more or less than 10%.

Age Groups and Savings

Age influences saving.

In 2018, people under the age of 35 made up the single largest group with lower earnings. Not surprisingly, they also accounted for less than 1% of the Canadians who are regularly contributing to their savings.

The average Canadian aged 65 or older typically has $259,225 saved across various challenges.

Obviously, this has a great deal to do with where someone is in their lifecycle.

Can you tell me the average Canadian savings in a year?

According to StatsCan, the average Canadian household grew by $854.94 in 2018. Although this may seem relatively low, it’s important to remember that the results are influenced by the broader average. Earnings vary widely amongst Canadians.

Statistics Canada shows that the median household spent more than it earned in the lower e-commerce sector.

What is the Median Net Worth of Canadians by Age?

To put it simply, net worth consists of assets minus all debt. Assets include pension savings and financial assets, homes, and vehicles, while liabilities include debt, credit card loans, and other debts.

Under 35: $48, 800 (source:

35-44: $234,400 (source:

45-54: $521,100 (source:

55-64: $690,000 (source:

It’s important to highlight the large jump from the under-35 value to the 35-45 age value. It is in this age range, typically that Canadians purchase their first home.

How Much Do You Need to Retire in Canada?

Since everyone has their own income, expenses, and goals, there isn’t a single solution to retirement savings. Safe estimates note that at least 65%-70% as mentioned above.

Another positive variable to note is that the cost of living decreases after retiring.

How to Save for Retirement by age group?

No time is too late for saving. It’s always helpful to set personal financial goals based on what stage of life you’re in.

It’s also incredibly important that you align those financial goals with a budget and reconcile that budget at a minimum on a monthly basis (but more often is better). It can be helpful to review your retirement plans at least once a year.

Tell me the best way to save.

Aside from the typical savings accounts, there are several options to save money that provide good returns on their investments.

Which tool for savings is the best for an individual will largely depend on what age group they fall into.

5 Best Ways to Save Money for the Future

  1. Track your expenses — make a budget.
  2. Spend intentionally — cut out non-essentials.
  3. Set savings goals — both short and long-term.
  4. Decide your priorities.
  5. Pick the right tools — grow your savings.

Some Tools for Saving

Tax-Free Savings Account (TFSA): According to, you can hold qualified investments like cash, stocks, bonds, and mutual funds in a TFSA and can withdraw contributions as well as the interest, capital gains, and dividends earned in the account at any time, without paying taxes (or reporting the withdrawals as income when you file your taxes).

A Registered Retirement Savings Plan (RRSP) is a savings account, registered with the Canadian Federal government to which you contribute for retirement purposes. When you contribute money to an RRSP, your funds are “tax-advantaged”, meaning that they’re exempt from being taxed in the year you make the contribution, as reported on

According to A GIC (guaranteed investment certificate) is a safe and secure investment with very little risk. You don’t have to worry about losing your money because it is guaranteed. A GIC works like a savings account in that you deposit money into it and earn interest on that money.

In Conclusion

As we’ve seen throughout this article, there is no perfect recipe for saving. It will depend largely on the reason for saving and at what stage of life you are. The most important thing about saving is that you do it, as much and as early as possible.

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