Managing expenses and financial pressures

Canadian students are balancing a range of rising expenses, with top costs including rent or residence fees, groceries and food, transportation, and entertainment or social activities. To help meet these financial demands, students are leveraging multiple funding sources – 78% hope to work during the school year and 53% will take out student loans. Despite these plans, nearly half (48%) say they feel overly dependent on their parents for financial support.

“Students across Canada are navigating significant financial challenges, from the rising cost of living, to unique student-related expenses,” said Frank Psoras, Executive Vice-President, Personal Banking Products and Payments, CIBC. “Many students are responding by finding additional sources of income and adopting effective budgeting strategies, such as creating a detailed budget and reducing non-essential spending.”

Key budget management strategies students are adopting include:

1. Spending cuts: Creating a budget (55%), redeeming student discounts (36%), using loyalty cards (32%)
2. Reducing discretionary spending: Cutting back on non-essentials (49%), staying in more (36%)
3. Lowering living costs: Buying cheaper brands or using coupons (45%), living with family (40%)
4. Reducing education costs: Applying for scholarships (35%), buying used textbooks (24%)

Students are also focused on building their financial skills, with 65% anticipating they will have a financial plan for the year and 67% believing their university or college should offer personal finance courses.

Embracing digital solutions

As students navigate these challenges, digital banking tools have become a cornerstone of their financial routines. The survey found that 92% of students are comfortable using digital or mobile banking solutions, and more than half rely on mobile or budgeting apps as their primary tools for managing money.

“Today’s students have grown up with technology and expect seamless, intuitive banking experiences that fit their busy lives,” added Psoras. “Students have unique needs when it comes to their banking and we are committed to helping them navigate this important transition with confidence by providing the advice, relevant offers and support they need to reach their goals.”

Supporting students’ financial journeys

As students and their families prepare for the back-to-school season, CIBC provides the support and resources necessary to pursue and achieve their ambitions.

The CIBC Best Student Life Bundle is a best in market offering designed to address the unique needs of students with a no-fee Smart Start or Smart for Student chequing account to help manage daily expenses, an eAdvantage Savings account, and a choice of student credit card to help build a credit history – available in-person at banking centres or through one digital application, serving both domestic and international students. Through partnerships with organizations like Skip and SPC, CIBC provides access to exclusive offers and discounts helping students with the savings and support they need to succeed throughout their academic journeys and into the future.

CIBC Smart Planner is an intuitive tool that gives students timely insights into their spending habits to help them track and understand their finances better and stay on top of their goals.

For more information about CIBC’s student banking solutions and resources, visit the CIBC Student Hub.

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Key highlights

• CFIB’s forecasts in partnership with AppEco suggest the Canadian economy contracted in Q4 2023 (-0.2%) but will rebound to 0.5% in Q1 2024.
• Consumer Price Index (CPI) inflation, both total (3.2%) and excluding food and energy (3.4%), receded in Q4 and is expected to be stable in the first quarter of 2024.
• The national job vacancy rate continued to decrease, with a slight drop to 3.7% in Q4. This represents 523,000 unfilled positions.
• Most businesses are still considering increasing prices in 2024. However, the average price hike is expected to be lower than in previous post-pandemic years at 3.1%, and fewer firms will be increasing prices than in previous years.
• A special look at manufacturing businesses reveals their optimism over the short and long term has been declining rapidly for the past two quarters. An increasing share of manufacturers also report insufficient domestic and foreign demand.

Conclusions by CFIB’s chief economist and vice-president of research Simon Gaudreault:

• Although the economy experienced a mild technical recession according to the forecasts and official definitions, the story is actually a bit more nuanced than that. Our analysis shows some key macro indicators (sales, employment) continue to display a certain strength, while at the same time others such as investment and optimism on Main Street (as reported in our latest monthly editions of the Business Barometer®) are weak. In any event, current forecasts point to a short-lived contraction of the overall economy, with a return to positive growth in early 2024. A real recovery for the small business sector should arrive much later given the enduring poor business environment.
• Inflation is generally on the downward trend, but our forecasts of some of its classic measures remain just shy of the Bank of Canada’s inflation-control target range of 1 to 3%. Other measures of underlying inflation rather indicate that we are within range, and much closer to the 2% midpoint. Given the current slowdown, the breadth of challenges facing Main Street and the delayed effects of past interest rate hikes, the Bank of Canada should seriously consider making monetary policy less restrictive as of next spring.
• Private investment plans are at their lowest level ever, having severely dropped by 12% compared to Q3. This is mainly driven by very low long-term small business confidence. Business owners who are feeling rather pessimistic about their future due to general uncertainty, various cost pressures and tax increases weighing on them are significantly less likely to invest in their business.

Read the full Main Street Quarterly here.

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Described as the Niagara Cluster, the region is made up of an extensive network or “cluster” of industries where intense economic activities can boost innovation and growth. It’s also one of the few regions in the world where premium wine grapes grow, adjacent to a world-class tourism asset in Niagara Falls.

By following best-practices and implementing key policies, similar to those in leading global tourism economies and premium wine industries, this Niagara Cluster has the potential to drive at least $8 billion in additional real GDP over the next 25-years. This represents an uplift of roughly 35% above baseline estimates in the region.

The Ontario wine industry plays a leading role within this cluster, acting as an accelerator for economic growth and job creation. Niagara is responsible for 90% of grape production in Ontario. In 2019, it is estimated the Ontario wine sector contributed just over $1.0 billion to Canada’s GDP.

The economic contribution of the Ontario wine industry reaches far beyond the footprint of its direct activities, benefiting from adjacent sectors including farming, construction, transportation, manufacturing, education, entertainment, and food and hospitality. The Niagara region is also built around a strong infrastructure network, including major highways, border crossings into the U.S., international airports within 100km and nearby access to Ontario’s largest port.

“Ontario wines already compete and win on the global stage, so working together to turn Niagara into a world-class wine and tourism region to drive significant economic growth is within reach,” says John Peller, President, Andrew Peller Ltd. and Wine Growers Ontario member. “What’s required are supporting policies and best practices that both B.C. and leading global wine regions adhere to and where Ontario needs to catch-up.”

“The most successful wine and tourism regions around the world are investing capital and growing their domestic share because their domestic industry is a priority and is supported by policies that incentivize investment,” says Paul Speck, President, Henry of Pelham and Ontario Craft Wineries member.

The Ontario wine industry also plays a critical role in driving tourism for the region, especially amongst a targeted demographic of high-end long-haul travellers.

“Niagara has a viable opportunity to become a flourishing and robust economic region with world-class wine and tourism,” says Anthony Annunizata, President, Tourism Partnership of Niagara. “The Ontario wine industry is a strong supporter of arts and culture, food and hospitality, so with the right focus we believe there is ample potential for Niagara’s tourism economy to also grow.”

Through a concentrated effort to embrace the Niagara Cluster and align Ontario’s wine industry with leading global best practices, there is a viable opportunity to not only significantly impact the Niagara region, its industries and communities, but also uncork Ontario’s economic potential.

To learn more about how to uncork Ontario, please download the full report or an executive summary at www.uncorkontario.ca

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Over half of small business owners in the survey said that managing social distancing (64 per cent), keeping up with cleaning (55 per cent), knowing what the rules are (52 per cent) and making customers feel comfortable (53 per cent) are top concerns for reopening. In addition, 48 per cent cited access to personal protective equipment (PPE) as a major concern. Three-quarters of survey participants said that their survival depends on making more sales soon and becoming less reliant on government subsidies.

“Making more sales is mission critical for businesses who are trying to survive, so turning the corner on shutdowns is welcome news,” said Laura Jones, executive vice-president at CFIB, in a statement. “It also brings practical challenges like figuring out how to make social distancing work, finding enough hand sanitizer and talking to employees about coming back to work.” 

Half of the business owners surveyed said they will need to make at least 75 per cent of their typical sales to make it worthwhile for their business to remain open throughout the summer, according to the CFIB. To help business owners, the CFIB has put together resources such as a PPEs for SMEs Facebook group where business owners that need PPE can connect with other business owners that are selling it.

“The PPEs for SMEs idea came from a business owner on one of our webinars who couldn’t find masks. Another business owner said she could help because her dog apparel company was making them,” Jones said. “Governments, consumers and associations all have a critical role to play in helping small business owners with a successful, safe reopening of the economy.”

For resources such as a customizable “We’re Open” sign with information for customers to keep safe as well as links to provincial guidelines, visit the CFIB website. CFIB’s Business Helpline, which assists business owners with HR and other issues, is temporarily available free of charge for any small business owner in the country who needs it and can be accessed here.

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