CHAPTER 6 Media Article
Saving is painless and it pays off,
The Telegram, January 21, 2007


This article stresses the importance of saving money. People are not realizing that even saving a few dollars from every pay cheque can make a real difference in one‘s financial health. In Canada, “personal debt . . . [is at] a record high” and it consumes 109 per cent of a person’s disposable income. Starting small in the amount to save and then spending only what you have saved, and nothing, more is key. A little can go a long way in regaining financial control. People who need help can seek advice from financial planners or even from non profit agencies such as the Credit Counseling Society of B.C. Saving for long term goals and short term goals are different, yet equally vital.


Connection to Chapter 6- dissaving, disposable income, (expenditure) multiplier

This article is related to chapter 6 through the topics of dissaving, disposable income, and to a lesser extent the expenditure multiplier. This article informs us that a lot of people need to start saving in Canada. This leads to the topic of dissaving. People in Canada spend so much that “personal debt has hit a record high.” Canadians are spending way more than they can afford. Consequently, their disposable income is being eaten away through debt repayments. However, from what I learned in Chapter 6 all this economic activity caused by so much spending will have multiplied effect on our GDP, and the expenditure multiplier calculates the effect of changes in spending on the economy. Thus, by dissaving Canadians are getting into a lot of debt that‘s consuming almost all, if not all, of their disposable income; consequently, their spending like any spending has a multiplier effect on our economy.


Personal Reflection

Living a "paycheque-to-paycheque lifestyle" is not a good idea. By not saving money these Canadians are only hurting their own financial well being; however, at the same time they are helping our economy by spending. If the opposite were to happen it would be detrimental to us all as the Paradox of Thrift might come into play. When people do not spend, businesses receive make less revenue and since they always aim to make as much profit as possible they will begin to cut expenses and people will get laid off. Consequently, if we want our economy to flourish, like now, does it mean that these people need to remain living on debt? What will happen when a majority of these people smarten up? Can our economy remain stable or will it cause a downturn?


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