Better Savers: Americans or Canadians?

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During this time of year it is typical for people living near a Canadian / US border to celebrate the friendship between these the two nations.  Friendship Festivals typically take place between July 1st and July 4th (or 5th).  They celebrate both Canada Day (July 1st) and Independence Day (July 4th).  I am especially thankful for the good relationship between the two countries as I am Canadian, my wife American, and all three of our kids are dual citizens.

I decided that this would also be a great time to talk about American and Canadian finances together.  I did this a little bit on July 1st in my Happy Canada Day post.  In that post I emphasized that I have learned a frugal way of living from my Canadian background.  On July 4th I posted on Freedom, Finances, Debt, and the Bible. Photo by diluvi

Today I was shocked when I found this article titled U.S. Savers Outpacing Canadians.  Thanks @JonChevrea for mentioning this article via Twitter.

Here are a few article highlights:

The percentage of disposable income saved by U. S. consumers shot to 6.9% in May, the highest level since December 1993. The rapid increase in the rate, which stood at zero in April 2008, has caused an historical anomaly by surging ahead of the savings rate of cautious Canadians. Canada’s savings rate stood at 4.7% in the first quarter.

Douglas Porter, the deputy chief economist at BMO Capital Markets, said if the current trend continues, the United States was on track to out-save Canada on a yearly basis for the first time since 1971.

Congratulations to our American counterparts.  As always with any bad news there is also a silver lining.  Of course, the good news here is that the events of 2008 reminded the American general population the importance of saving. From 0% in April 2008 (I have even heard negative numbers) to 6.9% saving today – amazing.  Bloomberg reports this is the fastest US savings rate in 15 years – since December 1993.

The following is a chart from a cbcnews.ca article. It shows that currently the total household debt in Canada is just shy of $60,000.

Canadian House Debt

The article also included these interesting statements:

The survey found that 42 per cent of respondents said their personal debt was rising in the past three years, and 21 per cent said they couldn’t manage their debt.

Nevertheless, the report suggests that survey respondents were optimistic in their attitudes toward debt. Seventy-nine per cent reported that they can either manage their current debt levels well or take on more debt.

Just for curiosity sake, what is the average household debt in America?  Here is some information from usatoday.com.

USA Debt

Either way you look at it, both Americans and Canadians need to save more of their incomes!

Here are a few biblical passages that remind us of the importance of saving:

“Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest.” (Proverbs6:6-8, NIV)

“Dishonest money dwindles away, but he who gathers money little by little makes it grow.” (Proverbs 13:11, NIV)

“In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.” (Proverbs 21:20, NIV)

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