- K-shaped economic recovery shows consumer sentiment falls in two camps for financial security
- BMO introduces new index to track whether Canadians feel they are getting ahead financially
TORONTO, Feb. 10, 2021 /CNW/ - While the COVID-19 pandemic has financially challenged consumers and businesses for nearly a year, most Canadians feel positive about their current financial situation and close to 40 per cent indicate that they are making real financial progress – taking steps to achieve the financial goals or measures that are important to them – according to new research from BMO and Ipsos. However, even for those who are moving the needle, there are still financial anxieties and persisting headwinds standing in the way of Canadians achieving their financial goals.
The survey is the first from the BMO Real Financial Progress Index, a new, quarterly measurement of Canadians' sentiment about money and whether they are making real financial progress.
The Canadian survey found:
- Age matters: Compared to 2020, 39 per cent of Canadians feel more financially secure now than they did a year ago. Another 39 per cent feel there hasn't been a material change in their financial security. Millennials and Gen Z are most likely to say they are feeling more financially secure (60 per cent and 55 per cent, respectively).
- Status quo: At the start of 2021, 38 per cent of all Canadians said they were making real financial progress, but the majority (51 per cent) are standing still and not feeling like they are getting ahead or falling behind.
- What's keeping us up at night and the knowing-doing gap: For Canadians who feel they are making progress, there are still financial anxieties, particularly COVID-19 (50 per cent) fear of unknown expenses (30 per cent), housing costs (27 per cent), and family related expenses (23 per cent). There is also a gap between knowing what to do to improve their finances and taking the steps to do those things. Nearly a third (32 per cent) indicated they often do things to worsen their financial situation, like spending more than they should.
"It's a positive indicator to see Canadians generally feeling optimistic about the year ahead when it comes to their finances," said Gayle Ramsay, Head, Everyday Banking and Customer Growth, BMO Bank of Montreal. "The current surge in personal savings as people spend less on things like entertainment and travel, as well as the relief measures introduced, are helping to prop this sentiment up. But with COVID, feeling secure can change in a moment. Our focus is on finding ways to help make sure Canadians are progressing towards their financial goals through the uncertainty."
On the other side of the K (shaped recovery)
The survey found that two very different realities exist around making financial progress. While there are Canadians who feel optimistic when it comes to their finances, nearly a quarter (22 per cent) are feeling less secure about their finances compared with a year ago.
For those not making progress (11 per cent), the effects of the COVID-19 pandemic have negatively impacted their financial situation and exacerbated the challenges they face when it comes to making progress:
- Only 29 per cent have enough savings to get them through an unexpected emergency
- 61 per cent say that the COVID-19 pandemic has worsened their financial situation
- 39 per cent say they're falling behind on basic needs
"We've been proactively checking in with thousands of customers since the beginning of the pandemic to help them navigate the current uncertainty and have seen a lot of ebbs and flows in consumer sentiment," added Gayle Ramsay. "From these conversations we know that some Canadians have been more challenged, and our focus has been on finding opportunities to help them on their way back up. And, to help, we have introduced new products and services that will keep more money in consumers' pockets and digital tools that identify potential cash shortfalls and help customers better manage upcoming expenses. We also hope this research encourages more dialogue about what it means to get ahead and how to carry forward any positive habits formed during the pandemic."
Savings and barriers
While Canadians are saving regularly, it's not always as much as they would like. Two thirds of Canadians are saving at least on a monthly basis, with 37 per cent finding themselves able to tuck money away from each paycheque. When it comes to trying to save a little more, the biggest barrier is not having any money left over after expenses (43 per cent) – highest for Millennial Canadians (47 per cent). Another challenge is that some (13 per cent) are not including savings as part of a household budget.
Looking at Canada's most-populous cities specifically, consumers in Vancouver are the most likely to be able to save regularly, followed by those in Toronto and Montreal (68 per cent, 67 per cent, and 59 per cent, respectively).
About the BMO Real Financial Progress Index
Launched in February 2021, the BMO Real Financial Progress Index is an indicator of how consumers feel about their personal finances and whether they are making financial progress. The index aims to spark dialogue that will help consumers reach their financial goals and to humanize a topic that causes anxiety for many – money.
The research detailed in this document was conducted in Canada from Jan. 5 to 12, 2021. A sample of n=3,413 adults ages 18+ in Canada were collected this wave. Quotas and weighting were employed to ensure that the sample's composition reflects that of the Canadian population according to census parameters.
To find out how BMO can help customers make financial progress, visit: https://www.bmo.com/main/personal
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $949 billion as of October 31, 2020, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
Web: www.bmo.com Twitter: @BMOmedia
SOURCE BMO Financial Group