Canadians are losing money due to a decline in real estate values and natural resource prices, according to new data from Statistics Canada. In the last quarter of 2018, the average “national wealth” of a single Canadian dropped from $304,085 to $296,933. Nationwide, wealth fell 2.2 percent to $11.1 trillion.
The decrease in wealth is primarily due to a 23.5 percent decrease in natural resources, or specifically weaker crude oil prices. “A decline in the value of residential real estate (-$72.5 billion) also contributed to the fourth quarter decrease, as housing prices continued to edge down,” the agency noted in a press release.
Meanwhile, Canadians are borrowing more money. The household debt service ratio increased 14.9 percent in the fourth quarter as growth in total debt payments eclipsed growth in disposable income.
The average citizen owes $1.79 in credit market debt for every dollar they make through disposable income.
The Organisation for Economic Co-operation and Development (OCED) reported in 2017 that Canadians borrow a lot more money than people in other countries (via the Vernon Morning Star.) It showed that the Canadian economy does not generate enough money to cover Canadians’ household debt.
The reason why Canadians lead in global debt is due to higher-than-usual real estate values, according to the OCED. Unfortunately, dropping real estate prices will make it more challenging for citizens to recover the value of their debt-fueled investments.
If you want to avoid debt, consider the following steps:
- Set and stick to a budget.
- Spend frugally.
- Create an emergency fund.
- Buy only what you can afford.
- Avoid cash advances.
- Don’t skip credit card payments.
- Avoid unnecessary balance transfers.
- Pay with cash or debit card.
- Limit the number of credit cards you use.
- Track spending.
