Why Canadians Are Saving Less Than Ever—and How to Turn the Tide

Canadians are saving less—and that’s a growing problem. Based on OECD figures, the national savings rate is projected to drop back to a mere 5% in Q4 2025. While this may seem like just a number, it paints a concerning picture of widespread financial vulnerability. Inflation, rising taxes, and escalating lifestyle costs are squeezing Canadians’ wallets, making it harder to build financial security and plan for the future.

The Hard Truth:

Inflation means everyday essentials—groceries, gas, housing—cost more each year, leaving less disposable income. Meanwhile, higher taxes eat into take-home pay, reducing the real growth of earnings. At the same time, lifestyle inflation pushes many to increase spending as incomes rise, often on non-essential items and services. The combined effect? Canadians are feeling the squeeze on multiple fronts, struggling to save enough for emergencies, retirement, or wealth-building investments.

Why This Matters:

A declining savings rate is more than a statistic; it signals a growing financial risk for millions. Without sufficient savings, unexpected expenses can swiftly turn into debt. Retirement goals become unrealistic, and the opportunity to build wealth through investing is missed entirely. Over time, this creates a financial cycle that’s increasingly difficult to break. According to Trading Economics, Canada is already in the bottom half in personal savings among the G20.

What Can Go Wrong:

• Emergency costs may force high-interest borrowing, worsening financial stress.

• Lack of investment slows wealth accumulation, reducing long-term financial security.

• Over-reliance on credit can spiral into unsustainable debt levels.

• Financial goals like homeownership or retirement may be delayed indefinitely.

Turning the Tide:

The good news? Canadians can rebuild their savings and start investing—even amid these challenges. Here’s how:

1. Budget with intention: Track income and expenses carefully to identify non-essential spending you can reduce.

2. Prioritize saving: Treat saving like a recurring bill. Aim to save at least 10-15% of your income, even if starting small.

3. Take advantage of tax-advantaged accounts: Maximize contributions to RRSPs and TFSAs, which shelter earnings from taxes and boost investment growth.

4. Start investing early: Even modest, regular contributions to diversified funds or ETFs leverage compounding returns over time.

5. Seek professional guidance: Financial advisors can help craft a personalized plan balancing savings, investing, and tax optimization.

Conclusion:

The current savings decline among Canadians is a wake-up call. Inflation, taxes, and lifestyle costs won’t disappear overnight, but with smart budgeting and a focused investment strategy, Canadians can regain control, build resilience, and secure a financially confident future.

Ready to move beyond saving and start investing? Reach out  to explore the strategies that fit your unique situation and goals. You can also read the related blogs on financial planning, managing finance and canadian financial realities.

If you need further support with your savings and investments - Let’s Talk. I help clients across Canada build sustainable financial plans rooted in clarity and confidence.