By Margaret H Johnson
Wow this has been a colourful year already with so much public attention being given to personal finance and household debt. This week alone there have been articles about retirement incomes, seniors and lotteries, the rising costs of cell phones, and Statistics Canada’s annual report on household expenditures. In other words this affirms the overarching prominence of money issues for most individuals and families from middle and lower income groups in Canada. For many, household expenditures and debt go hand in hand, continually pulling at their pockets, but Statistics Canada fails to acknowledge and analyze the debt we are dealing with.
And there isn’t just one or two problems or items causing all of the anxiety.
For example, the recent article in the Vancouver Sun about cell phone expenses brings up the Stats Can annual review of what Canadians spend their money on. In 2012 the average Canadian spent $75,443 on household expenses.
As I have mentioned almost every year for the last decade, these averages may be interesting, but they will not withstand even mild critical scrutiny.
To begin with, we know nothing about the incomes, the assets, the debts, the family size, ages, the geographic regions and so on. They are simply statistical averages. For example, when you examine the percentage that housing commands with respect to the total amount spent, then you might wonder who they are talking about. Housing at 21% of the household expenses does not reflect the reality of most middle and lower income families – and that of seniors on limited incomes. There is no category for child care – a huge expense for working families. A third irrefutable example – there is no mention whatsoever of any creditors anywhere? It’s as if no-one spends any money on car payments, lines of credit or credit cards – or owes the $517 billion owing by Canadians in consumer debt.
Still, it is worth noting the categories where Canadians are spending their money on.
| Average household expenditure, by province (Canada) | ||
2011 | 2012 | |
$ | ||
| Total expenditures | 73,457 | 75,443 |
| Total current consumption | 55,151 | 56,279 |
| Food expenditures | 7,795 | 7,739 |
| Shelter | 15,198 | 15,811 |
| Principal accommodation | 13,991 | 14,373 |
| Other accommodation | 1,208 | 1,438 |
| Household operation | 4,135 | 4,111 |
| Household furnishings and equipment | 2,027 | 2,183 |
| Clothing and accessories | 3,360 | 3,461 |
| Transportation | 11,229 | 11,216 |
| Health care | 2,211 | 2,285 |
| Personal care | 1,082 | 1,194 |
| Recreation | 3,711 | 3,773 |
| Education | 1,216 | 1,386 |
| Reading materials and other printed matter | 221 | 214 |
| Tobacco products and alcoholic beverages | 1,199 | 1,274 |
| Games of chance | 166 | 202 |
| Miscellaneous expenditures | 1,602 | 1,430 |
| Income taxes | 12,442 | 13,060 |
| Personal insurance payments and pension contributions | 4,191 | 4,272 |
| Gifts of money, alimony and contributions to charity | 1,673 | 1,831 |
| Source: Statistics Canada, CANSIM, table 203-0021 and Catalogue no. 62F0026M | ||
Of course this kind of budget would not be of much use to people whose incomes are less than the $75,000 per year or who have monster debt payments on top of their essential family expenses.
That said, this is an excellent time of the year for all of us to set up a budget or to refresh our old ones. Our needs and expenses change all of the time – inflation and taxation apply constant pressure on our ability to make ends meat and many of our assets depreciate in value and wear out and need replacing – such as vehicles and furniture.
We must also take a serious look at our debt obligations and explore our options to reduce or eliminate our household debt.
That’s what I’m here for. We can help.