Two-thirds of Canadians (69%) are still feeling good about their finances – but that's a 5% drop from last year according to a new poll by CIBC.
Leading the pessimism, unsurprisingly, are Alberta residents, who suffered a rough 2015 with a downturn in the oil industry and falling house prices. As a result, they’re downright heartbroken about their finances for the upcoming year with just 63% of residents feeling positive – down from 84% last year.
The oil industry may be mainly contained to Alberta, yet all Canadian residents, with the exception of those living in Manitoba and Saskatchewan, are feeling less confident compared to last year. The real culprit may have nothing to do with their area of residence; it may be something that affects all of us.
Debt Repayment Still a Major Concern
For the sixth year in a row paying down debt is the top financial goal of Canadians in 2016 according to a different poll also conducted by CIBC. With the debt to income ratio sitting at a record high for Canadians, it’s safe to say that some households are feeling the pressure.
"Every year Canadians tell us they want to get out of the red,” says Christina Kramer, executive vice president at CIBC. “Yet each following year debt reduction is still their top financial priority which indicates many are not making the headway they want," It doesn’t matter how old you are or what your job status is; reducing debt can be tough, especially if you took on too much.
Steps to Reducing Debt
- Create a realistic budget: Tracking your spending is the best way to get a realistic picture of where your money is going. Once you have the information, you can make adjustments to your spending and focus on reducing debt. It may also be worth switching to a cash only budget so you’ll only spend money that you have on hand.
- Prioritize your debt: If you have multiple kinds of debt, create a list of what your balance and interest rates are. You want to prioritize high-interest debts first, but keep in mind that making just the minimum payment will never get you back in the black.
- Talk to a professional: If you’re finding your debt to be unmanageable, don’t be afraid to reach out for help. Credit Canada Debt Solutions is a free service that has helped more than 2,000,000 Canadians with their debt. You don’t need to be near bankruptcy to work with them; they help anyone who’s looking for a solution to their debt.
Being Realistic About the Situation
Interesting enough, 80% of those surveyed are confident they’ll meet their future financial goals. It’s great to see that they’re optimistic, but that doesn’t address their current situations. The start of 2016 saw stock markets drop around the world, and the most recent announcement from the Bank of Canada doesn’t exactly scream confidence.
Canadians have become so focused on debt reduction that they have started to ignore other parts of their finances. Confidence alone won’t help you establish an emergency fund, save for retirement, or contribute to your child’s RESP - those require year-round attention.
Without some kind of financial plan in place, it’s not realistic to think that you’ll achieve your financial goals in the present or the future.
Are you optimistic about your 2016 finances?