The poll also found that inflation/rising costs of household goods (66 per cent) and high interest rates (28 per cent) remain the top financial concerns for Canadians. While 65 per cent of Canadians are worried about the possibility of a recession, over half feel prepared to weather an unexpected financial event or hardship (59 per cent) and most feel their financial situation is secure enough to withstand a recession (53 per cent).

“Financial priorities are shaped both by ambitions and by the economic environment – and we’re seeing Canadians adapt to the current environment by learning new strategies, such as creating a budget or reducing spending, to help them stay on track,” said Carissa Lucreziano, Vice-President, CIBC Financial Planning and Advice. “Prioritizing savings when costs are on the rise is challenging, but gaining insight from an advisor can empower Canadians with tailored, personalized advice and solutions to help them reach their financial goals.”

Despite challenges, Canadians are feeling a sense of optimism for the upcoming year, with 76 per cent expressing confidence in achieving their 2025 goals. 64 per cent of Canadians maintain a positive outlook on their current financial situation, with only 28 per cent having taken on more debt in the past 12 months.

Additional findings from the annual Financial Priorities poll: 

• Top reasons for taking on more debt include increased cost of living (44 per cent), day-to-day expenses beyond monthly income (29 per cent), unexpected financial emergencies (21 per cent), new vehicle (16 per cent), and loss of income (14 per cent).
• Among those currently employed, 54 per cent are concerned about their job security given the present economic environment.
• 24 per cent say advice to help manage the cost of living would help them feel more prepared for unexpected financial hardships.

Tools and support

In addition to expert, personalized advice, CIBC also offers clients the following online tools to help manage their everyday expenses and overall finances:

• Budget Calculator, offers a clear picture of your monthly cash flow to help make informed financial decisions.
• CIBC Smart Planner, an intuitive goal planning tool that makes it easy for you to set, track and reach your financial goals.
• CIBC Insights, offers tips and proactive alerts about everyday spending to make it easier for you to manage your money and stay on track to achieving your financial goals.

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Inflation (61 per cent) and rising interest rates (28 per cent) top the combined ranked list of financial concerns for Canadians this year.

The poll also found that while the majority (67 per cent) of Canadians agree we are either heading into a recession or already in one, most (64 per cent) feel financially prepared for the unexpected and 60 per cent believe their financial situation is secure enough to withstand a recession.

Overall sentiment towards finances has also remained constant since last year with 64 per cent of Canadians indicating they feel positive about their current financial situation and only a quarter (26 per cent) of people saying they have taken on more debt in the last 12 months.

“With household budgets under some pressure from higher costs, it’s not surprising that paying down debt is a top priority for Canadians in the new year,” said Carissa Lucreziano, Vice-President, CIBC Financial Planning and Advice. “Whether you are confident about meeting your financial goals in 2024, or have doubts about staying on track, working with a financial professional can help you implement a plan to help achieve your ambitions for the coming year and beyond.”

Additional findings from the annual Financial Priorities poll:

• Top reasons for taking on more debt include increased cost of living (46 per cent), day-to-day expenses beyond monthly income (38 per cent), unexpected financial emergencies (17 per cent), higher cost of borrowing (14 per cent) and loss of income (10 per cent).
• 36 per cent said if they won or received $5,000 they would put it towards their savings.
• 70 per cent of Canadians believe the uncertainty of the current environment makes it difficult to plan.
• Among those currently employed, 42 per cent are concerned about their job security given the present economic environment.
• 21 per cent say advice on strategies on how to offset the impact of inflation would help them feel more prepared for unexpected financial hardships.

In addition to expert, personalized advice, CIBC also offers clients the following online tools to help manage their everyday expenses and overall finances:

• Budget Calculator, offers a clear picture of your monthly cash flow to help make informed financial decisions.
• CIBC Smart Planner, an intuitive goal planning tool that makes it easy for you to set, track and reach your financial goals.
• CIBC Insights, offers tips and proactive alerts about everyday spending to make it easier for you to manage your money and stay on track to achieving your financial goals.

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“Most people find it very difficult to talk about debt and the financial challenges they’re facing, let alone the strategies for overcoming debt,” says Nancy Snedden, National Leader of the BDO Debt Solutions practice. “As a result, a lot of people who are struggling feel lost and isolated, making their situation even more stressful.”

The online survey of over 1,500 Canadians, conducted by Léger, found that of those Canadians with no plans to discuss their debt, they cite fear of judgement and feeling ashamed or embarrassed (38 per cent), along with privacy concerns (35 per cent), fear of people thinking they are asking for money (31 per cent) and fear of burdening others (29 per cent) as top barriers. Fear of judgement is felt most strongly among Canadians ages 35-54 years old (44 per cent).

Overall, Canadians between the ages of 18-34 years old appear to be struggling the most. They are the most concerned about their current debt situation (64 per cent) compared to those 55+ (40 per cent). For this younger demographic, the challenge to talk about financial issues, including debt, stems from knowledge gaps and low financial literacy when it comes to debt management concepts for almost one-third of respondents (32 per cent).

Of those Canadians who admitted they are concerned about their debt (54 per cent), over half (58 per cent) prefer not to talk about it or don’t know what to do about their financial situation. This behaviour is higher among females (89 per cent), who find it more challenging than males (81 percent) to discuss concerns about their debt and ask for help. Females are also more likely to fear judgement and feel shame (40 percent v 36 per cent of men). For older Canadians (55+), the survey found that only 22 per cent of respondents are comfortable discussing their debt with their children.

Among those who find it most difficult to discuss financial matters:

• 86 per cent say it would be difficult to admit they can’t afford their grocery bill
• 85 per cent would have difficulty discussing with family or friends that they have too much debt and don’t know what to do about it, and ask for help
• 84 per cent of respondents would find it difficult to tell a family or friend that they can’t afford their rent or mortgage, and that they are overwhelmed by credit card debt

“The results of our BDO Debt Stigma Survey clearly affirm a sense of shame and embarrassment among those burdened with affordability challenges and debt,” adds Snedden. “At BDO, we always encourage those struggling with debt to talk to someone they can trust – a friend, a family member or a licensed professional like a Licensed Insolvency Trustee. Talking about debt becomes much easier when the conversation focusses less on shame and more on resources and solutions.”

Across different levels of financial health, social stigmas and financial literacy gaps are a significant roadblock when trying to navigate conversations around debt, living costs and overall financial difficulties. However, with the significant increase in cost of living, Canadians are showing signs that more transparency with family and friends about their financial matters is needed. In fact, despite the taboos surrounding debt and other financial challenges, the survey finds that most Canadians (89 per cent) say they would admit to family and friends that they wouldn’t be able to participate in a planned event if they couldn’t afford it.

Given the affordability crisis brought on by inflation, there is a greater need to discuss financial matters, but important taboos and prejudices continue to get in the way.

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Canadians’ reliance on their smartphones continues to increase. Interac data reveals a 53 per cent jump in the use of Interac® Debit for mobile contactless payments in stores and a 17 per cent surge in its use for e-Commerce purchases between August 2022 and July 2023. Over one billion of these mobile transactions have taken place within a 12-month period for the first time ever.

“While many Canadians shifted to contactless early in the pandemic, our data shows consumers are now going a step further as mobile payments become mainstream, particularly as younger Canadians influence those around them to follow suit,” said William Keliehor, Chief Commercial Officer, Interac Corp. “Debit remains central to the way Canadians choose to pay, even as in-store and e-Commerce transactions take new forms.”

According to a recent Interac survey, nearly eight in 10 (78 per cent) Gen Z adults pay using their smartphone, well ahead of older demographics including their parents’ generation, Gen X (42 per cent). While Gen X Canadians appear to have more concerns about the security of mobile and contactless payments, their kids are influencing their payment habits. Four in ten Gen Xers polled (41 per cent) embrace payment options only after they have seen friends and family use them, while half of Gen Z respondents (52 per cent) have taught older family members how to pay with their phone.

“Interac is innovating to help make life easier for Canadians. We’re exploring the ever-evolving ways Canadians are connecting to the digital economy – whether it’s by making purchases, paying their transit fares, or supporting small businesses,” added Keliehor.

Spending snapshot:

• Generation debit: Among Gen Z Canadians who make purchases with their smartphone, over half of those surveyed (53 per cent) prefer to pay with debit. Three quarters of Gen Z (76 per cent) believe Canadians should always have the option to use debit when checking out online, making a purchase in an app, or paying in store.
• Hit the road: As Canadians head out to explore the country this summer, their smartphones are always in tow. Interac Debit mobile transactions at service stations have increased 48 per cent over the last 12 months.
• Al fresco fun: The trend continues on the patio. Mobile Interac Debit purchases at restaurants and eating places have risen 63 per cent over the last 12 months and 40 per cent at fast food restaurants.

As we look to the future, nearly two thirds of Canadians polled (63 per cent) expect that it will soon be normal to leave home without a physical wallet, knowing you can pay with a smartphone or smartwatch. As of this month, TTC riders in Ontario can pay their fare with Interac Debit using their smartphone or physical debit card. This capability is set to fuel further growth in mobile transactions in the months to come. For more information on setting up contactless payments with Interac Debit on your smartphone, click here and to take a deeper dive into these payment trends, visit In The Know.

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At a time when Canadians are even more reliant on a tax refund and minimizing any money owed, H&R Block points to the many new and updated tax credits and deductions available to help offset cost of living increases.

“Canadians are reacting to inflationary and interest rate pressures with a push-pull mindset. Many are looking to curb their spending and seek out additional sources of income,” said Peter Bruno, President, H&R Block Canada. “More than ever, Canadians are relying on a tax refund to help ease their financial situation. The good news is there are many new and updated tax credits and deductions. But our research shows that Canadians are struggling to navigate these changes based on their personal situation and understanding their eligibility.”

Rent or mortgage payments sucking up disproportionate amount of income: The general rule of thumb is that monthly housing costs (rent or mortgage payments with related tax and utility bills) shouldn’t exceed more than 30% of gross income. However, the study reveals that nearly half of Canadians (47%) report spending more than this on their rent or mortgage payments alone, with 15% paying 40-49%, and 14% paying more than 50% of their monthly income on these costs.

Many anticipate a tax return but nearly two-thirds struggle to understand new tax credits: The study indicates that around two-thirds (66%) of Canadians don’t feel they have a good understanding of how all the new tax credits might apply to them. Despite this, there’s a lot of optimism around refunds, with 41% of Canadians saying they expect a refund this tax season. Many Canadians (40%) are relying on a tax refund due to the financial pressures they face. One-in-three (33%) report having no idea whether they’ll owe money or get a refund, and 39% anticipate they’ll need to pay taxes.

Divided over having a tax nest egg:  Nearly half (49%) of Canadians say they don’t have money set aside if they owe money this tax filing season, versus 45% who have created a tax nest egg, and 6% who say they aren’t sure if they have enough money put aside.

Conservative approach on how to spend their tax refund: Of those that anticipate a tax refund, most Canadians plan to use it to keep up with everyday cost of living expenses. This includes 30% who plan to use it to pay down debt or their credit card balance; 29% plan to use it to pay for everyday essentials; 24% to pay off bills; 20% to start a rainy-day fund, and 20% who plan to invest it in a TFSA, RRSP or RESP.  However, 13% plan to use it towards a vacation and 10% plan to splurge on treating themselves or a loved one.

“The call-out to all Canadians is to file your taxes as soon as possible to make sure you have the runway to fully understand all the new benefits and credits available to you this tax season.,” said Mr. Bruno. “Last year, $37 billion was put back into the pockets of Canadians through tax refunds. That number could be even higher this year.”

Key tax filing changes this season will help put money back into Canadians’ pockets: Many new measures and changes to tax credits will help offset the increased costs of living are available to eligible Canadians, including:

• Top up to the Canadian Housing Benefit. A tax-free payment of $500 is available to Canadian families with income below $35,000, or below $20,000 for single Canadians who pay at least 30% of their income towards rent.
• Quarterly Canada workers benefit (CWB): A refundable tax credit that tops up lower income Canadians, providing up to $1,428 for single workers and up to $2,461 for a family.
• New Canada Dental Benefit: Up to $650 can be claimed for parents or guardians of children 12 years or under without dental coverage and an annual family income under $70,000.
• Income tax brackets changes: Shifts in tax brackets means good news for many Canadians who may find themselves in a lower tax bracket, which means paying less income tax.
• Basic Personal Amount (BPA) increased: Every Canadian filing taxes can claim the BPA, which is adjusted to inflation and other factors. For this tax season it increased to $14,398, which means every tax filer gets an uplift on their tax return.
• TFSA and RRSP limits increased: The limit for Tax Free Savings Accounts increased to $6,500; for Registered Retirement Savings Plans the limit increased to $31,560 (or capped at 18% of your income). This means Canadians can put more money into savings while reducing taxable income.

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The campaign is supported by a recent national study commissioned by Credit Counselling Canada that evaluates Canadians’ attitudes and habits regarding their finances and debt-related matters, including asking how they measure their overall financial health.

The Down with Debt survey, an Angus Reid survey of 1,510 Canadians, asked respondents about the top ways they measure their financial health. Stability/living within their means was the top answer (54%), while being debt-free came second (42%). The study also found that one-in-10 Canadians have had to resort to a high interest financial service (payday loan, installment loan, rent to own product) to deal with debt since the COVID-19 pandemic began.

“Credit Counselling Canada and the CBA are seeking to help Canadians assess their financial health and find help if they need it,” says Stacy Yanchuk Oleksy, interim CEO of Credit Counselling Canada.

Debt Assessment Quiz starts the conversation
Money and debt problems usually develop over time. Recognizing the warning signs and getting help early can make a big difference. To that end, Credit Counselling Canada and the CBA have launched the Debt Money Quiz to help Canadians get started on the journey to financial resilience.

The quiz asks users a series of simple questions regarding their debt and finances. Topics covered include preparing and sticking to a budget, relying on credit for everyday expenses, making minimum payments on credit cards, among others. More acute signpost questions include: whether the person has been declined at a point-of-sale, has used one credit card to pay another, has relied on payday loans, received letters or phone calls from creditors.

“Canada’s banks want to see their customers succeed financially at every step,” says Neil Parmenter, President and CEO, Canadian Bankers Association. “The Debt Money Quiz, supported by the CBA, will help Canadians who may be struggling financially take stock of their situation and find support to guide them forward, starting with their financial institution.”

SOURCE Credit Counselling Canada

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“The first step towards Canadians owning their financial future is to ask for help. But some delay getting help due to feelings of shame, not fully coming to terms with their debt or by rationalizing it’ll get better. For 43 years we’ve been partnering with Canadians to help them weather their financial crisis through our proven debt solutions. We empathize with Canadians and show them their debt is a situation; not who they are. Most of them tell us they wish they would’ve started the process years sooner, as they are able to reclaim their self-confidence and be optimistic about their financial future, once they do get started,” says Shane Pennell, Chief Executive Officer of A.Farber & Partners.

Last year the Office of the Superintendent of Bankruptcy Canada (OSB) reported its largest annual decrease ever recorded in Canadian consumer and business insolvency filings. The decrease coincided with the onset of COVID-19 and emergency responses. And the trend continued into the first half of 2021, which also saw a significant decrease in insolvency filings.

Pennell adds, “Canadians are not filing for financial insolvency at the expected rate during the pandemic. We attribute the decrease to the income support and lender deferral programs that enabled these already overburdened and cash-strapped Canadians to temporarily get by each month and pay their bills. But it also created a false debt reality for many enabling them to delay the inevitable when it comes to their debt. As income support winds down, we anticipate a potential surge of Canadians facing insolvency in 2022.”

As insolvency filings are expected to increase over the next 6-12 months, A.Farber & Partners has expanded its national reach to partner with more Canadians in one of their greatest times of financial need. Recently it opened new offices in three new provinces in Manitoba, Saskatchewan, and Nova Scotia. Currently it has almost 100 offices and over 250 employees.

A.Farber & Partners offers a dedicated team of Licensed Insolvency Trustees that partner with Canadians to identify a viable debt solution that matches their specific financial situation, such as a consumer proposal. A consumer proposal is a legally binding process, which can only be administered by a Licensed Insolvency Trustee, the only government regulated debt professionals in Canada. As a debt solution, a consumer proposal offers to pay creditors a percentage of what is owed to them without interest and enables Canadians to regain control of their finances and get back on their feet more quickly.

The majority of Canadians partnering with A.Farber & Partners opt for a consumer proposal due to its many benefits including repaying only a portion of their debt through one manageable monthly payment based on what they can afford. It also enables them to feel better about paying back a percentage of their debt to creditors and has less impact on their credit score in the future. So over time, and as Canadians rebuild their finances, they will be eligible for such lifestyle staples as car loans.

A.Farber & Partners also provides long-term education and counselling services. These education and counselling services are geared towards helping Canadians get back on track and better understand debt including the difference between good versus bad debt and how to effectively manage it to build a healthier relationship with their finances in the future.

SOURCE A. Farber & Partners

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