In a hurry: Canadians are losing confidence in their personal finances

23% of Canadians feel less secure about their finances compared to last year.

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Canadians are beginning to lose confidence in their personal finances after more than a year of constant optimism. based on Bank of Montreal’s quarterly Real Financial Progress Index.

The index found that almost a quarter (23 per cent) of Canadians feel less secure about their finances compared to last year. That’s an 18 percent increase just three months ago.

Most point to the impact of rising inflation on their personal finances.

A majority (61 percent) of consumers said the country’s inflation rate, which hit a new 31-year high of 6.8 percent in April, has had a substantial effect on their finances.

“The fastest and broadest inflation in three decades is forcing Canadian households not only to cut back on discretionary items, such as vacations, but also to shift purchases of staples, particularly food,” said Sal Guatieri, senior economist at BMO, at a press conference. release.

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Nearly half of Canadians (49 percent) reported a decrease in savings due to increased costs.

Housing remains the most important obstacle for many (37%). But monthly bills (up four points to 30 percent) and credit card debt (up two points to 23 percent) also keep more Canadians from moving forward financially than last quarter.

The index found that younger generations are particularly susceptible to lower savings. Millennials (62 percent) and Gen Z (56 percent) were more likely to reduce their savings compared to previous generations.

The majority (81 percent) of Canadians are planning to adjust their lifestyle in response to rising prices.

More than half (52 percent) of consumers are adjusting the way they shop for food by buying only the essentials and choosing cheaper alternatives to brand names. Another 52 percent said they are intentionally eating less or buying less when dining out.

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Many (34 percent) drive less to offset rising gas prices. Others (29 percent) are cutting back on vacation spending or canceling vacations altogether. Some (23 percent) are even cutting out their gym and cable subscriptions to cut costs.

However, Canadians seem to be prioritizing retirement planning. The index found that most are more likely to reduce their overall savings (36 percent) than their retirement contributions (22 percent).

“As the cost of everyday purchases, from groceries to gasoline, continues to rise across the country, it’s important for consumers to review and adjust their financial plan,” Gayle Ramsay, director of everyday banking and BMO customer growth. . “Now is a good time to seek the advice of a financial expert on ways to navigate this period of high inflation, be prepared for unexpected setbacks, and make sure you’re on track to meet your financial goals, whether it’s saving for a down payment or financial planning. retirement.”

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The BMO report recommends postponing major purchases where price increases may be temporary as an additional measure to combat inflation.

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Office occupancy in the US has stabilized in recent months rather than returning to pre-Omicron levels. As of May 25, the 10-city average stood at just 43 percent for the same week in 2019, according to data from Kastle. “The trend speaks volumes about the impact hybrid work is having on employment,” Bank of Montreal economist Erik Johnson wrote in a note. “It is clear that hybrid working is not just about health concerns, but is an enduring preference on the part of workers.”

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Price levels continue to rise at a rate we haven’t seen in decades, and rising inflation is having serious consequences for your cash savings. Fortunately, investment legend Warren Buffett has plenty of advice on what to buy when consumer prices soar. Our content partner MoneyWise has the details.

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Today’s Posthaste was written by Noella Ovid, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.

Do you have an idea for a story, plot, embargoed report or suggestion for this newsletter? Email us at posthaste@postmedia.com, or hit reply to send us a note.

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