Canadians are contributing less to TFSAs as monthly costs soar: survey
Canadians are contributing less to a tax-free savings account (TFSA) while basic monthly living expenses have increased, according to a new survey by BMO.
The online survey of over 1,500 adults was conducted Nov. 3-8, 2023, and found that basic monthly costs rose $397 year-over-year as 68 per cent of those surveyed say current economic conditions are negatively affecting their finances.
More than half of Canadians say they are spending less on discretionary items, including eating out (57 per cent), travelling (53 per cent) and clothing (53 per cent).
The survey found that fewer Canadians were using TFSAs in 2023 compared with 2022, at 62 per cent compared with 66 per cent.
The average balance of those using TFSAs did rise, though, going up nine per cent to $41,510 in 2023, according to BMO.
Paying off debt was found to be the primary reason 24 per cent of Canadians surveyed said they are not investing this year, with millennials the generation most focused on paying off debt rather than investing.
BMO Economics says though that improving economic conditions may pull Canada back from the brink of a recession or lessen its severity. Interest rates are expected to reduce in the near future as well, which may help ease the current economic situation.
“The results from this survey are understandable given prevailing economic conditions,” said Robert Kavcic, a senior economist with BMO.
“Household debt is historically high, inflation has lifted day-to-day cost pressures, and high interest rates make paying down debt a compelling option that might be crowding out some new investment. But on a positive note, easing financial conditions into 2024 should support the economy, and expected rate cuts from the Bank of Canada starting
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