Remember back in March when we talked about all kinds of tax-saving tips, and how important it was to file your taxes on time – along with of course, all the RRSP talk and all the other March madness that comes to Canada every year? Well the taxes have been filed and lots of Canadians are even starting to get their refunds in the mail. But just what are they going to do with it? According to a recent BMO study, the majority of Canadians are going to pay off their debt!
The study was performed by Leger Marketing, and it found that 74% of Canadians will be getting a tax refund this year. Last year the average tax income refund to be received was $1,506. That’s a big chunk of change and this year, Canadians are planning on being smart with it.
According to the survey, 37% of us are planning on using the extra cash to pay off Toronto mortgages, 2nd mortgages, credit card debt, and household hills. Another 16% are going to put it towards saving or investing; 8% are planning on using the money for travel and leisure; and 6% are planning on improving their home with their refund.
The news should be encouraging to everyone, and it certainly is to BMO execs. Head of the BMO Retirement Institute, Tina Di Vito, said when talking about the survey results, “It’s encouraging to see that more than one-third of Canadians are using their refunds this year to lower their overall debt load. It’s especially important for Canada’s Boomers to focus on reducing debt as they approach retirement. Although it may be tempting to splurge on items, paying off debt will be more beneficial in the long run.”
Meanwhile Serge Pepin, the Vice President of Investment Strategy at BMO Asset Management spoke to the second majority of Canadians that are planning in using their refunds for savings and investments. “Putting your money into your savings or dedicating an amount to your investment portfolio is a wise move because it helps set yourself up well for the future,” he said. “Whether it’s saving for your child’s education or investing for your retirement, putting money away will put you one step closer to reaching your financial goals.”
We’ve certainly been hearing for long enough that we have too much debt, and that it’s the “number one domestic risk to the economy,” as Mark Carney sees it. These numbers, combined with other recent stats to show that we’re bringing our debt down, certainly should bring some relief to Ottawa – and to those households.
