A study by the Atlantic Institute for Market Studies has found people in Atlantic Canada save less money than the rest of Canada, especially in Prince Edward Island.
Jackson Doughart, a research coordinator says the saving rates in the four provinces is considerably lower than in other provinces and territories. He said the study from 1981 until 2015, showed savings were rising in Canada until the 2001-2010 decade.
By using decade averages to have a better look at the trends, Doughart said savings dipped in Canada during that time.
“They dipped in Canada during that period but then recovered except in two provinces, mainly Prince Edward Island and Nova Scotia where savings have actually been worse than in years of the current decade than they were from 2001-2010.”
Doughart said in the 1980s, the average person in P.E.I. net saved about $1,200, about 13 per cent of their annual income.
Saving less and less
“You compare that to today, the average Islander dis-saved $426 — that means just including pension savings contributions, people on average are spending beyond their means by a little more than $400 a year, about two per cent of their income.”
Doughart said this is a worrying trend in personal finance.
Some things that may be contributing to the trend are the low interest rates to get a loan.
“Historically that has had a negative effect on savings rates.”
“The other one that is important is the old age ratio. People over the age of 65 tend to dis-save because they’ve been saving over a lifetime and their using money they previously saved instead of putting income away.”
AIMS has made recommendations to governments in hopes of reversing the trend by lessening the tax burden.
“If people had more disposable income, they tend to save more.”
And Doughart said if people are able to save more, they should be given a tax incentive to do that.
“It’s important for governments to have their own books in order but its important socially for us to worry a bit about personal finance trends and what we in the findings of this paper is that the personal finance situation seems to have decreased recently.”