Wednesday, February 26, 2014

Dear Canadians, how is our "household" doing?


Current account is like a household account of current income and expenses. Ideally, you want to keep your current account near or above zero as much as you can. If your income is lower than your expenses over a longer period of time, you may be in trouble because you are accumulating debt to cover your expenses, and you will eventually have to repay those debts to your creditors. In that case, you want to make sure you are accumulating current account deficit by spending on things that will increase your income in the future (i.e., that you are making investments). But, if you are simply continually spending on regular day-to-day expenses more than you earn in income, then you might be in trouble in the future, when your creditors come knocking on your door asking for their money. So, dear Canadians, how well has our "household" been doing lately when it comes to its current account?

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