Canadians look to maintain pandemic-era savings rates amid rising inflation

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A majority of Canadians plan to continue spending less and saving at higher levels than they did before the pandemic, but are worried that inflation and the rising cost of housing could prevent them from doing so, according to a new survey.

The Scotiabank survey found that 63 per cent of Canadians polled don't plan on spending the way they did before the pandemic, while 55 per cent are concerned they won't be able to save the way they were able to during the pandemic.

D’Arcy McDonald, Scotiabank’s senior vice president of day-to-day banking, said he was surprised that such a large portion of respondents planned to continue spending less.

"If you talked to me in the spring, I would've told you that when restrictions lift and restaurants, patios and travel resumes, that this watershed of savings would be unleashed onto the economy, but that's not true," said McDonald.

"Canadians are still embracing the budgeting habits they acquired during the pandemic."

But he said inflation, rising real estate and rent costs, and higher interest rates could be some of the reasons people feel their ability to save will be hindered in the coming months.

He added the return to working in offices will also add a significant cost to people's lives.

"You can't underestimate the real savings that remote working is creating for people," said McDonald, who said he realized the impact after commuting to downtown Toronto for the first time in a while recently.

"I spent $10 on my GO Train ticket, two coffees for $5 a piece, and grabbed a beer after work, and not doing that at home, that saving is still very real."

Jason Heath, a certified financial planner and managing director of Objective Financial Partners, said the change in how Canadians save is enormous.

Immediately before the pandemic, the household savings rate hovered around three per cent, according to data from Statistics Canada. By mid-2020, it skyrocketed to 28.2 per cent, and most recently was at 14.2 per cent in July 2021.

McDonald said Canadians have realized the benefit of saving more and carrying less credit, which is why they show a desire to continue spending less in the future.

But both Heath and McDonald say young people in particular will face difficulties saving at the same rate.

"A big part of it has to do with a lot of young people who are looking at the price of real estate, and those prices have gone gangbusters since the pandemic began, and rents have gone up," said Heath.

"So I think there are a lot of young people looking ahead trying to figure out how they're ever going to afford real estate, have a family and save."