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Posted November 27, 2012


Canadians resolve to better manage their finances in 2013: RBC Canadian Consumer Outlook

Resolutions for New Year include spending less, saving/investing more
National overall index rises 12 basis points from 2011

TORONTO - Heading into 2013, more (37 per cent) Canadian consumers feel their personal financial situation will improve than they did at this same time last year (32 per cent) and they are taking steps to be in better financial shape, according to the quarterly RBC Canadian Consumer Outlook (RBC CCO).

Looking ahead, one-in-three Canadians (31 per cent) are planning to focus on reducing their debt, 26 per cent on spending less, 25 per cent on saving or investing more, and another 20 per cent intend to take all of these actions in 2013. Canadians are also sending out a strong signal that less money will be going toward major purchases in 2013, with 44 per cent reporting they will spend less on big ticket items such as cars, household appliances or vacations. This is consistent with findings released earlier this month that Canadians intend to be more frugal this holiday season and that managing their debt is a key priority.

"Canadians may believe brighter days are ahead because they are making resolutions to better manage their finances by reducing debt and curbing spending not because of their outlook on the Canadian economy," said Richard Goyder, vice-president of personal lending, RBC. "While New Year's resolutions may start with great intentions and fizzle out later in the year, setting out a plan to reduce your debt, keep it under control and save more for that rainy day will help keep you on track."

The most recent Economic and Fiscal Update issued by the federal government in November estimated that Canada's real GDP will grow by 2.0 per cent in 2013. RBC Economics is currently forecasting the Canadian economy will grow by 2.4 per cent in 2013 and will be releasing its next Economic and Financial Outlook in December.

"The Canadian economy has been growing at a rate close to its long-run potential," noted Craig Wright, senior vice-president and chief economist, RBC. "However, we will have a sharper picture of Canada's future growth prospects when the U.S. addresses the fiscal cliff and European policymakers can move the Eurozone out of recession and address fiscal and financial market imbalances."

The RBC CCO is Canada's most comprehensive consumer assessment of the economy, personal financial situation and economic and purchasing expectations. Benchmarked at a baseline of 100 in November 2009, the national overall RBC CCO Index rose to 82 in October 2012, up 12 basis points from this time last year and two points higher than the previous quarter. Highlights from the RBC CCO, Top 10 Financial Tune-up Tips for 2013 and Online Money Management Resources follow below.


Reduce debt 31% 26% 28% 29% 32% 33% 37%
Spend less 26% 29% 21% 23% 23% 34% 26%
Save or invest more 20% 22% 25% 22% 22% 17% 15%
Take all actions above 25% 22% 29% 25% 28% 20% 24%

2012 2011
National 37% 32%
British Columbia 31% 27%
Alberta 43% 39%
Saskatchewan/Manitoba 37% 36%
Ontario 39% 31%
Quebec 33% 32%
Atlantic Canada 35% 31%

National 29% 26%
British Columbia 35% 27%
Alberta 42% 37%
Saskatchewan/Manitoba 34% 30%
Ontario 30% 27%
Quebec 18% 18%
Atlantic Canada 28% 25%

National 22% 22%
British Columbia 17% 23%
Alberta 15% 19%
Saskatchewan/Manitoba 14% 17%
Ontario 30% 26%
Quebec 16% 20%
Atlantic Canada 22% 18%

EXPECT LOCAL ECONOMY (City/town/village) TO
2012 2011
National 16% 12%
British Columbia 26% 10%
Alberta 22% 22%
Saskatchewan/Manitoba 17% 20%
Ontario 13% 10%
Quebec 16% 9%
Atlantic Canada 13% 11%

*In the next year  **In the next quarter


Reduce your debt:

If you are among the 31 per cent of Canadians who plan to focus on reducing debt next year, you can start off by paying down debts which have the highest interest charges first.

Consolidate your debt:

To make all your debts easier to manage and pay down, talk to a financial advisor about consolidating your debts. Combining multiple payments into one loan can help make it easier to manage your debt and you may even reduce your interest costs and be able to pay down your debt sooner.

Budget for the year ahead:

Having your own budget allows you to manage your expenses, pay down debts and save for future goals. If you don't have a budget, set one up for the new year; if you already have one, the beginning of a new year is a good time to do a budget review. You can get in-person budgeting advice any time of the year from a financial planner at your local bank branch; there are also online resources to help you get started (see "Online Money Management Resources" further below).

Make your credit card work for you:

Credit cards can help you keep track of your expenses and also earn valuable rewards more quickly, but whenever you use your credit cards, do so wisely - pay off your full balance before the due date each month.

Have an emergency fund:

Unexpected expenses can catch you off-guard throughout the year. An emergency fund can help you take care of unplanned costs without straining your budget.

Compare loans to lines of credit:

If you are planning a major expense in the new year (buying a car, renovating your home, investing in your RRSP), explore whether a loan or a line of credit will work best to help you manage that expense (see "Online Money Management Resources" further below).

About to buy a home? Get pre-approved for a mortgage:

To get a better idea of your price range before you buy your first home, apply for a pre-approved for a mortgage, with professional advice that will help you understand the long term costs and choose the right mortgage option to suit your needs.

Review your investments:

The start of any new year is a good time to review the mix of assets in your investment portfolio and to recheck your risk profile, to see if you need to make any adjustments.

Use all your income tax deductions:

Remember to pay all tuition fees, investment management fees, accounting and legal fees if deductible, safe deposit box fees, childcare expenses, alimony, medical expenses and any business expenses by December 31 of the year, if you want to deduct them on that year's tax return.

Individual Pension Plan option for business owners:

If you are a business owner with an incorporated company, you may find both year-end corporate income tax deductions and a structured retirement savings plan for yourself through an Individual Pension Plan (IPP).

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