Paying down debt remains the number one financial priority for Canadians as they enter the new year, according to an annual CIBC poll.
This is the 10th year in a row that Canadians have identified debt as their main financial goal. Debt repayment is followed by Canadians wanting to keep up with bills and get by (18%), grow investments or wealth (13%), save for a vacation (8%), and save for retirement (8%).
The survey indicates that the majority of Canadians have been seriously focussed on achieving debt freedom in 2020, with 71% of respondents saying that they held back from borrowing any more money in 2019.
Of the 28% who did borrow money in 2018, the top reasons were to cover day-to-day items, buy a new vehicle, and finance an unexpected emergency.
According to the survey, 71% of respondents said they’re worried about the rising costs of household goods in 2020 (a 7% increase from last year), and 55% said they’re worried about a potential recession.
Those worries are well-warranted. The most recent Canada’s Food Price Report, released in early December from Dalhousie University and the University of Guelph, indicates that the average family can expect to spend roughly $480 more a year on groceries in 2020.
As for a looming recession, those concerns have been floating around for some time now. The Bank of Canada’s pause on interest rates since December 2018 has understandably prompted concern that Canada’s economy is in a fairly fragile spot right now. But according to the Conference Board of Canada’s projections, we will escape a recession in 2020.
Nearly 80% of those surveyed by the CIBC said they feel it’s better to pay down debt than to build savings, but 33% worry they’re missing an opportunity to build a nest egg because of that.
“Debt repayment doesn't need to be worrisome; it needs to be managed,” said Jamie Golombek, managing director of CIBC Financial Planning and Advice, in a release.
“But, it shouldn't come at the expense of savings. A strong financial plan incorporates debt management strategies, savings for financial goals, and a balanced portfolio with investments designed to make money in all market conditions.”
Other key findings from the poll:
- 30% of respondents are concerned about the low Canadian dollar
- 29% of respondents are concerned about low wages and lack of income growth
- 26% of respondents are concerned about household debt
- Fewer respondents are feeling optimistic about their financial situation in 2020 (32% in 2019 versus 41% in 2018)