BY KELSEY DUNBAR
This year, the average Canadian’s debt is nearly $16,000, according to a Royal Bank of Canada survey. To most students that sounds about right, but this figure is for all Canadians.
The annual RBC survey found that consumer debt, such as credit cards, lines of credit and various loans, has risen 21 per cent from $13,141 to $15,910 this year.
The spike in debt isn’t just nationally, average debt in Ontario rose 13 per cent to $17,416. This does not include mortgages.
RBC did not offer any explanation for the increase.
Tanya Staples, a financial planning professor at Conestoga College, said that $16,000 sounds low for an average because consumer debt is a real issue for Canadians.
“I think debt is a Canadian issue and I think it exists because of the lack of financial literacy. We don’t understand money. We assume money is about adding and subtracting; it isn’t about adding and subtracting, it is about the physiology and emotion that we attach to spending,” she said.
Staples wants everyone to understand that there is good debt and there is bad debt. Good debt is if there is debt directly attached to an asset that appreciates in value, such as student debt because they gain skills and knowledge to help them obtain a better paying job. Home debt is also considered to be good debt as a house appreciates in value over time.
If students want to know how much bad debt they have, they need to look at debt on their credit cards, non-student lines of credit or day-to-day expenses that are higher than they should be.
“Like anything in life when we have a sense of no control it automatically increases anxiety and stress. So the very first thing you need to do is get control of your spending, and you can’t get control if you don’t understand how you spend,” Staples said.
If students want tips on their finances Staples encourages them to participate in a financial planning week Nov. 18 to 22 on campus. Senior financial planning students will be providing the financial advice and or ideas for personalized spending plans.
BY KELSEY DUNBAR