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moneysense.ca, 12/12/06
Survey of Household Spending
Statistics Canada released its 2005 Survey of Household Spending today. The survey found that Canadians spent an average of $66,860, up 5.1% from the previous year’s average spending of $63,640. Household spending is growing at a brisk pace in recent years (4.5% in 2002, 1.8% in 2003, 4.0% in 2004 and 5.1% in 2005). For the record, growth in CPI during the same years was 3.9%, 2.0%, 2.1% and 2.2% respectively.
The major categories of expenses were:
Personal taxes – 20.5%
Shelter – 19%
Transportation – 13.6%
Food – 10.6%
Recreation – 5.9%
Insurance and RRSPs – 5.9%
Household operation – 4.6%
Clothing – 3.9%
The portion spent on different categories is almost the same as last year, suggesting that spending in each category is increasing. Taxes, for instance, are up 6% due to rising incomes, shelter costs are up 3% due to an increase in energy prices, transportation expenses are up 5% driven by more vehicle purchases and a 10% jump in spending on gasoline. The survey found significant increases in spending on tuition fees (11%), gasoline (10%), health care (8%), natural gas (8%), property taxes (6%) and electricity (3%) while automobile insurance premiums declined 3%.
You can also read about the survey for the past two years here and here.
moneysense.ca, 12/12/06
How can you find out a stocks real rate of return (assuming reinvested dividends)?
This may be a silly question but how is an RRSP an expense?
Wouldn’t this go into the category of savings?
I find the growth in spending interesting. This points out something that I have talked about a little bit on my site and plan to expand on (once I figure out my own numbers) in the future; Tracking your household’s expenses and tracking the growth rate of those expenses will give you the foundation of information you need to figure out if your investments and pensions will support your lifestyle. The fact that the growth in household spending was 5.1% but the Consumer Price Index (CPI) was only 2.2% should serve as a red flag that CPI may not be measuring your personal inflation…
Chris: No idea. I would have put it in the saving column too.
0xcc: Household spending could be more or less than actual inflation because households could buy more or less goods and not the exact same basket as the previous year. For instance, in 2005 Canadians bought more cars than in 2004. Still, I agree with you that CPI is less than actual inflation experienced by our household.
Thanks Canadian Capitalist. I have been enjoying the last few articles on the latest StatsCan data and even more the comments that the data has triggered. From a personal perspective, my spending likely doubled in 2005 in that I sold my first house and purchased a new one immediately embarking on renovations. That Canadians in aggregate have increased spending and reduced saving seems indicative of what I am seeing. We are late in an expansion and the recession that is inevitably coming will bring things back to a more normal level, i.e., less discretionary spending, more savings.
Since people are so interested in the Jones’ and what they are up to, the net worth data by income and age is fascinating. My two-earner family (150,000. What strikes me most is how interested we humans are about all of this (myself included). I feel kind of sad becase that top quintile median is getting higher and higher and it will take at least another ten years to acheive. (You and your readers are probably thinking that this cow doesn’t deserve to be in the top quintile at all if you dines at the public trough.) In short, we humans clearly suffer from status anxiety. For the vast majority the trappings of wealth are far out of reach. When wealth is visible it is more than likely illusory – a mask for indebtedness, unrealistic choices. Conrad Black provides an excellent life lesson in the outcomes of hubris and excessive living like a lord.
I am quite concerned about other recent data that shows Ottawa house price increases up higher than other cities such as Montreal and Toronto. Is this proof of a bubble? To go with this data is the spending breakdown by city that Ottawa is also big spending too. Thoughts anyone?
Sorry – my second para should read:
Since people are so interested in the Jones’ and what they are up to, the net worth data by income and age is fascinating. My two-earner family with 2 kids are well above the median by age (150,000). What strikes me most is how interested we humans are about all of this (myself included). I feel kind of sad becase that top quintile median is getting higher and higher and it will take at least another ten years to acheive. (You and your readers are probably thinking that this cow doesn’t deserve to be in the top quintile at all if you dines at the public trough.) In short, we humans clearly suffer from status anxiety. For the vast majority the trappings of wealth are far out of reach. When wealth is visible it is more than likely illusory – a mask for indebtedness, unrealistic choices. Conrad Black provides an excellent life lesson in the outcomes of hubris and excessive living like a lord.
Maybe because they get the figures from Revenue Canada, and Revenue Canada calculates your income as cash received + money withdrawn from RRSP/RRIF – money put into an RRSP? After all, if they’re counting taxes as “spending”…
Then again, it might just be a fudge factor to get the totals to add up so that SPENDING+SAVINGS=INCOME
Can’t anybody answer my question? Help!
Joe: It is not very easy to find total return information (including reinvested dividends) at least from publicly available databases. For asset classes I use the calculator on the Stingy Investor website:
http://www.ndir.com/SI/articles/downside.shtml