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Consumer Finances and Priorities - Canada - August 2016

“Canadians are somewhat pessimistic about economic conditions and concerned about food inflation and employment but the housing market is not a national concern”.
– Sanjay Sharma, Senior Financial Services Analyst

This report discusses the following key topics:

  • Consumer confidence is middling at best
  • Real estate and housing market values are not national concerns
  • A quarter of Canadians are living from pay cheque to pay cheque
  • Saving for retirement is the top long term priority; vacation, credit card debt and emergency funds are the top three short-term priorities

As the Canadian economy adjusts to lower commodity prices, the economy continues to grow at a slow pace. There are still lingering concerns about food inflation and employment prospects for young Canadians. Also, house prices in the hot markets of Vancouver and Toronto have been climbing at an unsustainable clip. According to economists, house prices in these two cities have outpaced local economic fundamentals such as job creation, immigration and income growth.

This report delves into the personal finance lives of Canadians. We explore issues related to consumer confidence, what Canadians think about the national and local economy, their financial situation, spending and shopping habits and financial priorities and consumer confidence. We look at how the demographic groups differ in their attitudes and levels of financial preparedness and the ways in which Canadians are reacting to the economy. As families face the crunch of multiple priorities, we examine their shopping habits and spending behaviour. The report also looks at consumer attitudes towards the housing market and housing affordability.

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Table of contents

  1. Overview

      • Regional classifications
        • Income
        • Executive Summary

            • The issues
              • Consumer confidence is middling at best
                • Figure 1: Consumer confidence and opinions about the economy (% agreement), June 2016
              • Real estate and housing market values are not national concerns
                • Figure 2: Opinions about real estate and housing, June 2016
              • A quarter of Canadians are living from pay cheque to pay cheque
                • Figure 3: Agreement with statements on savings and spending, June 2016
              • Saving for retirement is the top long term priority; vacation, credit card debt and emergency funds are the top three short-term priorities
                • Figure 4: Financial priorities, June 2016
              • Women are more motivated to look for ways to save money
                • Figure 5: Agreement with statements on saving money, June 2016
              • The opportunities
                • How can the financial services industry respond to the squeeze faced by consumers?
                  • Helping Canadians plan for retirement
                    • Opportunity for financial advisors and the financial industry to make the topic of investments more appealing to women
                      • What it means
                      • The Market – What You Need to Know

                        • Canada’s population is expected to age in the coming years
                          • The population is growing and becoming more ethnically diverse
                            • Canadian real estate prices to see largest annual increase this century, according to a Royal LePage forecast
                              • Canada’s inflation rate moved up to 1.7% in April
                                • Canada’s economy disappoints; risk of contraction in the second quarter
                                • Market Factors

                                  • Canada’s population is expected to age in the coming years
                                    • Figure 6: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                                    • Figure 7: Projected trends in the age structure of the Canada population, 2014-19
                                  • The population is growing and becoming ethnically diverse
                                    • Women outnumber men in Canada
                                      • Women’s representation and participation in the labour force
                                        • Part-time work
                                          • Wage gap declines but women still earn less than men
                                            • New financial literacy initiatives rolling out across Canada
                                              • Canadian real estate prices to see largest annual increase this century, according to a Royal LePage forecast
                                                • Canada’s economy disappoints; risk of contraction in the second quarter
                                                  • Canada’s inflation rate moves up to 1.7% in April
                                                  • Key Players – What You Need to Know

                                                    • BMO launches service allowing people to open accounts through smartphones
                                                      • Meridian introduces Sweep: A feature that ‘sweeps’ money daily
                                                        • PayPal launches peer-to-peer payments in Canada
                                                          • Canadian Tire introduces mPay
                                                            • Scotiabank gives Apple Pay users 10% cashback
                                                            • Innovations

                                                              • BMO launches service allowing people to open accounts through smartphones
                                                                • With $1 million in funding, Toronto-based Drop hopes to dominate North America’s loyalty market
                                                                  • MasterCard Canada planning to roll out ‘selfie pay’ in Canada
                                                                    • PayPal launches peer-to-peer payments in Canada
                                                                      • Digital banking upheaval the focus of Ivey’s new lab
                                                                        • Meridian introduces Sweep: A feature that ‘sweeps’ money daily
                                                                          • Tangerine and Ryerson University partner to open FinTech incubator
                                                                            • HSBC’s new PFM (Personal Financial Management) tool, Nudge and other PFM tools
                                                                              • Scotiabank branches out with two new branch formats, Express and Solutions
                                                                              • Marketing Campaigns

                                                                                • Apple Pay arrives in Canada
                                                                                  • Figure 8: TD bank Apple Pay online advertisement, July 2016
                                                                                • Scotiabank targets new immigrants
                                                                                  • Figure 9: Scotiabank’s StartRight program advertisement, July 2016
                                                                                • Scotiabank gives Apple Pay users 10% cashback
                                                                                  • RBC’s High Interest Savings Promotion
                                                                                    • Figure 10: RBC High interest savings promotion email advertisement, July 2016
                                                                                  • Canadian Tire introduces mPay
                                                                                    • Figure 11: Canadian tire new mobile app print advertisement, November 2015
                                                                                  • CIBC launches its new smart account
                                                                                    • Figure 12: CIBC direct mail advertisement for CIBC smart account, April 2016
                                                                                • The Consumer – What You Need to Know

                                                                                  • Consumer confidence is middling at best
                                                                                    • Real estate and housing market values are not national concerns
                                                                                      • A quarter of Canadians are living from pay cheque to pay cheque
                                                                                        • Saving for retirement is the top long-term priority; vacation, credit card debt and emergency funds are the top three short-term priorities
                                                                                          • Women are more motivated to look for ways to save money
                                                                                            • One in five Canadians have shopped with their mobile phone
                                                                                            • Consumer Confidence and Opinions About the Economy

                                                                                              • Consumer confidence is middling at best
                                                                                                • Figure 13: Consumer confidence and opinions about the economy (% agreement), June 2016
                                                                                              • Women are more pessimistic than men
                                                                                                • Figure 14: Significant differences in consumer confidence (% agreement), by gender, June 2016
                                                                                              • Albertans are more optimistic about the local economy, while Quebecers are less so
                                                                                                • Figure 15: Agreement with statement on economic conditions, Quebec vs Alberta, June 2016
                                                                                              • …while Chinese Canadians appear more optimistic
                                                                                                • Figure 16: Select consumer confidence statements (% agreement), Chinese Canadians vs overall population, June 2016
                                                                                              • Inflation is a concern for many older Canadians
                                                                                                • Figure 17: Opinions about inflation (% agreement), June 2016
                                                                                            • Real Estate Prices and Housing Affordability

                                                                                              • Real estate and housing market values are not national concerns
                                                                                                • Figure 18: Opinions about real estate and housing, June 2016
                                                                                              • Young Canadians are most concerned about housing affordability
                                                                                                • Figure 19: Agreement with statement on housing affordability, by age, June 2016
                                                                                            • Personal Finances

                                                                                              • A quarter of Canadians are living from pay cheque to pay cheque
                                                                                                • Figure 20: Agreement with statements on savings and spending, June 2016
                                                                                              • On the positive front, a third of young Canadians have at least $1,000 saved for emergencies
                                                                                                • Young women are most stressed about their finances
                                                                                                  • Figure 21: Agreement with statements on personal finances, June 2016
                                                                                                • But among older women, this worry may be due to a lack of confidence
                                                                                                  • Younger Canadians more likely to believe their generation is financially worse off
                                                                                                    • Older Canadians are more likely to manage their finances carefully
                                                                                                      • Figure 22: Agreement with statements on managing finances, June 2016
                                                                                                  • Retirement and Inflation

                                                                                                    • Middle aged Canadians are worried about retirement
                                                                                                      • Figure 23: Agreement with statements on financial worry factors, June 2016
                                                                                                    • Women are reacting to inflation through stricter expense control
                                                                                                      • Figure 24: Personal finances, by gender, June 2016
                                                                                                  • Financial Priorities

                                                                                                    • Saving for retirement is the top long term priority
                                                                                                      • Figure 25: Long term priorities (beyond a year), June 2016
                                                                                                    • Buying a home is the top priority for young women
                                                                                                      • Figure 26: Top long-term priority (Rank #1), by age and gender, June 2016
                                                                                                    • Vacation, credit card debt and emergency funds are the top three short-term priorities
                                                                                                      • Figure 27: Short term priorities (within a year), June 2016
                                                                                                    • Paying credit card debt is the top short-term priority for men
                                                                                                      • Figure 28: Top short-term priority (Rank #1), by age and gender, June 2016
                                                                                                    • Women place a higher priority on saving for a vacation and emergency fund
                                                                                                      • Figure 29: Significant differences by gender, short and long-term priorities, June 2016
                                                                                                    • Buying investments is a much higher priority for Chinese Canadians
                                                                                                      • Figure 30: Significant differences in short and long-term priorities, Chinese Canadians vs overall population, June 2016
                                                                                                  • Spending Behaviour

                                                                                                    • Women are more motivated to look for ways to save money
                                                                                                      • Figure 31: Agreement with statements on saving money, June 2016
                                                                                                    • Older Canadians and women more likely to use loyalty cards
                                                                                                      • Figure 32: Agreement with statements on loyalty rewards cards, June 2016
                                                                                                  • Shopping Habits

                                                                                                    • One in five Canadians have shopped with their mobile phone
                                                                                                      • Figure 33: Agreement with statements on shopping behaviour, June 2016
                                                                                                    • Older consumers more likely to stick to familiar brands but less likely to travel far for discounts
                                                                                                      • For one in five women, shopping is a stress reliever
                                                                                                        • Buying on credit: Difference between reality and self-perception
                                                                                                          • Figure 34: Agreement with statements on credit, June 2016
                                                                                                      • Appendix – Data Sources and Abbreviations

                                                                                                        • Data sources
                                                                                                          • Consumer survey data
                                                                                                            • Consumer qualitative research
                                                                                                              • Abbreviations and terms

                                                                                                              Companies Covered

                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                              Consumer Finances and Priorities - Canada - August 2016

                                                                                                              £3,199.84 (Excl.Tax)