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What were the Biggest Financial Concerns of 2012?

13 January 2013

We know, we’re almost halfway through the first month of the new year. Aren’t all of our lists and “Best Of’s” of 2012 over yet? This will be the last one, we promise. But when we stumbled across the Finacial Post’s list of what Canadians were most stressed about financially in 2012, we had to share it with you. So what were they, and will any of these appear on our list of biggest worries for this year? We have a feeling they just might.

Does this come as a shock to anyone? With our debt-to-income ratio sitting over 164%, it would be more worrisome if Canadians weren’t stressed about the amount of debt they had. With interest rates set to rise this year, it’s no wonder that we’re so worried about it. A jump of just 1 per cent will turn a $100,000 interest-only HELOC into a debt worth $4,500 a year for the homeowner. That’s a pretty big jump from the $3,500 a year it sits at now.

If you were looking for a tax shelter last year, you were stressed. Not so much because you couldn’t put your money away somewhere, but because you didn’t know where to put it. It’s difficult to know which will give you the most tax savings, as it largely depends on your income and your own personal situation. In order to strike this stress off your list for this year, find a good financial advisor now!

What’s stressful about downsizing? You have a smaller home that you’re paying less for (and doing less for in the way of upkeep,) and you no longer have those three empty mouths at your table to feed? Yes, downsizing can certainly keep some of that cash in your pocket. But if you’re not in the right market, downsizing your home can be tricky, and not always profitable. And let’s not kid ourselves. A move of any kind is always stressful.

It seems more people thought about adding to their family last year, as the cost of raising a child was also one of the biggest concerns we had. Unfortunately, no one can tell you how much it will cost. The Manitoba Department of Agriculture estimates the total cost of child-rearing one child is $191,665. Of course, that largely depends on how you’ll be schooling them, what extra curricular activities they’ll be engaged in, and what kind of lifestyle they (and you) will have.

What to spend on children
So maybe you have no control over how much it costs to raise kids. But you do have control over where your money goes in your child-rearing budget. After school sports, art lessons, music lessons, RESPs, clothing, etc. There are a lot of choices, and parents are stressed about those decisions.

Early retirement
Our desire to stop working earlier has not left us, even if the actualities of making that happen have. While three decades ago it wasn’t unheard of for people to retire at the age of 55, this just isn’t a possibility anymore. Shrinking pensions, higher costs of living, and economic uncertainties are all taking away the idea of Freedom 55 for most of us.

Frustration over limited growth
Whether it was landlords seeing no profits, even with rent increases, to investors left wondering why their government bonds or stocks haven’t performed as well, there’s no question there were limited gains to be had in 2012. Whether or not we’ll see better growth in 2013 will depend on economic uncertainties in the U.S. mostly, as things with the European debt crisis seem to have at least settled down, if not been solves altogether.

Life insurance
This one’s simple: Canadians just don’t have enough. But add to that the fact that Canadians are also very confused as to just how this type of insurance works. Not only is it the most valuable protection you can give yourself and your family, it’s also a great tax shelter and can shield you from creditor claims.

Budgets stress people out. They’re confused as to how to make them, what to do with them, and how to make sure they’re following them. Simply put, take advantage of any of the great budget creation tools online and make one now. With our debt data where it stands, you can’t afford not to.

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