Monday, December 31, 2018
A new CIBC poll finds paying down debt is the No. 1 financial priority for Canadians heading into 2019, the ninth consecutive year debt repayment has topped the annual survey. Further, almost a third (29 per cent) say they've taken on more debt in the past 12 months citing day-to-day expenses as the top reason for piling up debt.
"Debt weighs heavily on Canadians, so it's no surprise that Canadians continue to put debt concerns at the top of their list of priorities each year. Debt can be a useful tool for achieving long term goals such as home ownership or funding education, but if you're turning to debt to make ends meet, it may be time for cash-flow planning instead," says Jamie Golombek, Managing Director, CIBC Financial Planning and Advice who shares tips in a new video. "Reviewing your income and expenses with an expert can uncover ways to cut back, lower interest payments and reveal tax efficiencies to stretch your money further so you can reach your goals."
Key poll findings:
While two-in-five (39 per cent) Canadians worry that they're forsaking their savings by focusing too much on their debt, the vast majority still (84 per cent) believe that it's better to pay down debt than build savings. This poll finding comes as Statistics Canada recently reported that the average Canadian household owes $1.78 for every dollar of disposable income, even as the pace of borrowing continues to slow. Not surprisingly, with many (63 per cent) fearing that the stock market has already reached a peak, Canadians may be tempted to pull back on savings to buckle down on their debt – a decision motivated by emotions, not fact, finds an earlier CIBC report.
"There's rarely enough money to do everything, so it's critical to make the most of the money you earn by prioritizing both sides of your balance sheet – not debt or savings, but both," says Mr. Golombek. "It boils down to tradeoffs, and balancing your priorities both now and down the road. The idea of being debt-free may help you sleep better at night now, but it may cost you more in the long run when you consider the missed savings and tax sheltered growth."
Downturns are often temporary, and nothing new, says Mr. Golombek. The real risk for investors is that they'll make knee-jerk reactions that they're likely to regret when the market rallies up again and they've missed out on those gains.
"Ups and downs can be distracting, but it's important to stay invested and not let short-term market noise knock you off course," says Mr. Golombek. "This is where having a trusted advisor can help."
"Remember, your portfolio is built to achieve your long-term goals and takes into account any volatility over that time. The key is to have a financial plan in place with a balance of investments that can both weather any downturns and benefit from them as well," he adds.
Mr. Golombek shares tips to making your money go further in 2019:
About the 2019 Financial Priorities poll: On December 3, 2018 an online survey of 1519 randomly selected Canadian adults who are members of Maru/Blue's online panel Maru Voice Canada. For comparison purposes, a probability sample of this size has an estimated margin of error (which measures sampling variability) of +/- 2.5%, 19 times out of 20. The results have been weighted by education, age, gender and region (and in Quebec, language) to match the population, according to Census data. This is to ensure the sample is representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.