The Vanier Institute of the Family says the 2000s should be called the 'decade of debt.' (iStockphoto)Canadian household savings collapsed in the 1990s and debt levels rose to record highs in the 2000s, according to a preliminary report by the Vanier Institute of the Family.
"For many families in Canada, the first decade of the 21st century brought unprecedented opportunity: these years witnessed continuous labour market growth, moderate rises in average household income, and a substantial upward shift in household savings rates," said the report.
"This decade, however, also brought with it never before seen growth in household debt. The 2000s can be labelled the decade of debt. In this same vein, the 1990s can probably be labelled the decade of the collapse of savings as annual savings plummeted by two-thirds between 1990 and 2000."
The institute looked at Statstics Canada figures for spending and savings rates, as well as increases in incomes and household debt levels.
They found that household income barely budged in the 1990s, moving up by just one per cent, compared to a 10 per cent rise between 2000 and 2009.
Yet, when it came to spending, both decades saw an increase in 10 per cent.
How families paid for that extra spending was partly explained by rising debt levels and falling savings.
"In the 1990s, this increase was financed by both rising debt and a sharp decline in annual savings. In the 2000s, the 10 per cent rise in spending was financed by rising incomes and soaring debt," according to the report.
Household debt rose by 22 per cent in the 1990s and by 45 per cent in the 2000s.
During that same period, the savings rate in the 1990s fell by 64 per cent, but rebounded and grew by 14 per cent in the 2000s.
The Vanier Institute will release a more detailed look at current trends in family and household finances next month.
Read more: http://www.cbc.ca/consumer/story/2010/01/29/consumer-vanier-report.html?ref=rss#ixzz0e7C4UYdd
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Along the vein of being able to pile on more and more debt, I was reading that CommunityLend was launching in Canada. Just means that if you can't get money from the bank you can go ask random people online to help you pile on the debt!
I read an article about it at the below:
www.lendco.net/home/consumer-finance-blog
Every household experiences "household debt" because of not managing your finances. To manage your finances, seek help from your accounting-nonprofit advisers, and they will help you on how to manage your family's finances.
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