The Canadian Paycheck: Here Today, Gone Tomorrow

The Forbes article I shared on Monday about two Calgary roommates saving $55,000 during a “Buy Nothing Year” really got me to thinking – and not just because saving more than 50 per cent of their combined take-home pay was an amazing feat. It definitely is amazing and all credit goes out to Geoffrey and Julie for their dedication in achieving that goal.

But what this article really got me thinking was, “what the hell do we spend on our paychecks on?”. Seriously folks, if you can cut out more than $50,000 in spending and still live a comfortable life, on what exactly are we spending our hard-earned dollars?

Some quick Internet research turned up a few interesting facts on how the average American spends their money. While I’m sure Geoffrey and Julie could find lots of fat to cut, spending that, for me, could be truly called ‘discretionary’ came in somewhere around the 15 per cent mark. Maybe I’m just a bit of a softy, or perhaps Americans have a newfound love for frugality – what I found most startling was that the average American actually has a positive balance before taxes are figured in – making well over $60,000, but spending less than $50,000. This left me wondering exactly how America became the most indebted nation in the world.

But, let’s be honest, what I was really curious about, by this point, was how Canadians stacked up against our frugal neighbours. According to a fabulous infographic I’ll share with you on my LinkedIn page on Friday, not so well. Some of the depressing highlights (lowlights?) of this study were as follows:

  • The ‘miscellaneous’ budget alone of the average Canadian equals almost 15 per cent of their paycheck.
  • Maybe we try to hide some of our ‘leisure’ spending in there, as the average Canadian claims to spend less than $100 per paycheck in that area.
  • Both these items however pale in comparison to personal tax, which, for the average Canadian, is the single largest line item in their budget.

There were many more interesting facts to be mined, but considering The ATM Man’s campaign to #savecash, the following were the findings I considered the most interesting, and most disturbing:

  • The average Canadian accumulates $65.11 of debt with each paycheck. So every month, we are worse off than the month before – $1692.86 worse off per year, to be exact.
  • This is particularly true in Ontario, where we accumulate almost $165 in new debt with each paycheck. Doesn’t that make you look forward to payday?
  • Not surprisingly, StatsCan reports that the debt of the average Canadian increased by $2779 from 2012 to 2013.

This was during a period of historically low interest rates – which you might say has encouraged overspending. But these rates won’t last forever, and the question is whether we’ll be able to reign in our overspending once interest rates go up.

With this in mind, we’d all be well advised to follow Geoffrey’s and Julie’s example, even if a little less militantly, of figuring out exactly which spending is discretionary, how much can be cut out, and how to ensure you don’t overspend.

You know our position, the more you touch, feel, and get to know the cash you have, the less likely you will be to part with cash don’t. When was the last time you said ‘hello’ to your money, the last time you actually held some in your arms?

Why not go visit an ATM today and get reacquainted with your cash. You just might not be so quick to part, enabling you to actually #savecash in the end.

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