The Desjardins Personal Finance Index

Canadians show serious shortcomings when it comes to savings. This is confirmed by the most recent web survey of 3,300 respondents throughout the country on behalf of Desjardins Group, as part of the Desjardins Personal Finance Index (DPFI).

Principal results are as follows:
  • 60% of respondents feel that they don't save enough.
  • 94% admit they buy things they don't need.
  • 47% don't have a financial cushion to cover 3 months of living expenses.
  • 50% of respondents nearing retirement age (55 to 64) stated they don't have retirement savings.
  • 31% of respondents are unfamiliar with or know nothing about savings methods and products offered by their financial institution.

Slow-growing skills

Since its creation in 2012, the Index is updated annually to track its progress over time. The 2013 results show that Canadians' knowledge and behaviour with regards to personal finances has changed little over the last few years.

Young people aged 18 to 24 show serious shortcomings

It's not surprising that young people aren't well versed in the features of RRSPs, don't have a retirement savings plan and are unfamiliar with returns on equities: these things are far from their thoughts. However, it's a little more worrisome to see that they don't have the basic skills required to understand and capitalize on the mechanics of savings:

  • 49% of people aged 18 to 24 gave incorrect answers to a simple question on real returns (which factor in inflation).
  • 45% of young people were unable to handle a simple question on the concept of compound interest.
  • 70% of young people failed to answer a simple question on investment risk.

Deficient retirement planning

A number of respondents to the survey that led to the development of the Desjardins Personal Finance Index stated that they had no retirement savings plan. This is a very worrisome finding, especially in the context of an aging population:

  • 40% of respondents aged 45 to 64 who were still in the workforce said that they hadn't estimated the revenue they'll need upon retirement and had no savings plan for retirement.
  • Including the people who had estimated their retirement needs, nearly 60% of respondents hadn't set up a savings plan.

The study also showed that Canadians have a real lack of knowledge and skill when it comes to interest calculations. 49% of respondents were unaware that credit card interest charges are calculated as of the date on which the item or service was purchased. Moreover, 60% of respondents were unable to compare total interest paid on 2 loans with the same terms and different amounts extended at different interest rates.

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