BURN BABY BURN!
What's Your Burn Rate?
Courtesy of Mackenize Investments

A survey sponsored by Mackenzie Investments shows that Canadians aged 18 and over still need guidance when it comes to spending, saving and investing. The results shed some light on Canadians’ “Burn Rate,” or how quickly we spend our income. In the end, much of the money we spend could be invested, saved or used to reduce debt. A wise spending choice today can improve our quality of life tomorrow.

Some key findings among the research include:

• On average Canadians make $100 disposable cash last four days
• Over two-thirds (67%) admit that spending money makes them happy
• 42% of Canadians say they have never stopped themselves from buying something so they could invest the money instead;

The research also revealed other interesting points

It takes the average Canadian four days to spend $100 cash (which translates to $760 per month). Nearly one quarter (23%) said they can’t even make it to 48 hours with $100 cash.

Only half of Canadians are very aware of the amount of discretionary spending they do on an average day. How many times have you taken out $100 and suddenly it’s gone – and you can’t remember where or what you spent it on? Understanding your cash flow and where it’s going is the first step in successful cash management practices.

Contrary to many stereotypes, Canadian men and women share the blame for being the biggest household spenders. 59% of women and 55% of men say they spend money the fastest. And don’t forget about your kids - 9% of women say their kids are the biggest money burners.

While it’s important to watch your own spending habits, if you have a family, it’s critical to remember that they may all be spending just as much, or just as quickly, as you are. That is why talking to your family about money, and how to spend, save and budget within your means, is critical to overall household financial health now and later.

Over two thirds of Canadians (67%) say that spending money makes them happy or gives them a “rush”. This was followed by 12% who said it makes them feel guilty and 5% who said it makes them miserable. Women are twice as likely as men to say it makes them feel guilty (15% versus 8%).

Sure it feels good to buy something you really love. And saving and investing may not be as much fun as spending, but it’s important to know how to do both well. For an outside perspective, a financial advisor can talk you through some of your planned purchases and how some of that money, if invested, can work for you today and tomorrow.

When asked what kind of purchases fuel their burn rate, 31% of Canadians said entertainment and dining out (those in the Prairies lead the pack at 41%). This was followed by spending on children and grandchildren at 22%, and on home purchases (21%). We don’t seem to be fashion-conscious, with only 7% naming clothing.

Eating out used to be considered a luxury – now it’s become an every day event for some. Making wise spending choices doesn’t mean not spending. But it’s amazing how making a few meals at home can impact your pocket book.

Ever stopped yourself from buying something you wanted so you could invest the money instead? For 42% of Canadians, the answer is never.Interestingly, younger Canadians appear more likely to invest: 62% of those under 45 have invested in lieu of spending, compared to 50% of those over 45.

We’ve developed into a “spend now, worry later” society. But thinking about investing today removes some of that worry down the road. Go to www.burnrate.ca or call me to see how your savings, when invested, can add up.

Canadians continue to use credit as an extension of their income. Of the 80% who said they own a credit card, 43% carry a balance, and the average amount of that balance is $1,710.80. Albertans carry the highest average balance of all, at $2,553.20, while Quebecers carry the lowest, at $1,101.90.

Credit is here to stay, and Canadians continue to embrace it to achieve the lifestyle they’re seeking. As with spending, credit can be used wisely and worked into an overall financial plan. I can help you manage it all.

This article was prepared by Terry Fay who is an Investment Advisor with Dundee Securities Corporation, a DundeeWealth Inc. Company. This is not an official publication of Dundee Securities and the author is not a Dundee Securities analyst*. The views (including any recommendations) expressed in this article are those of the author alone, and they have not been approved by, and are not necessary those of Dundee Securities.

The particulars contained herein were obtained from sources which we believe reliable but are not guaranteed by us and may be incomplete. The opinions expressed have not been approved by and are not those of DundeeWealth Inc., its subsidiaries, or its affiliates, including, but not limited to Dundee Securities Corporation, Dundee Private Investors Inc. / Ltd., Dundee Insurance Agency Ltd., Dundee Bank of Canada and Dundee Mortgage Services. This website is not deemed to be used as a solicitation in a jurisdiction where this Dundee representative is not registered.

Insurance products provided through Dundee Insurance Agency Ltd.
Only securities related products and services referenced are offered through Dundee Securities Corporation.

Dundee Securities Corporation, Member CIPF, is a DundeeWealth Inc. Company
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