Canadians are cutting back on debt amid fears of recession

CIBC poll discovers Canadians' financial priorities for 2020

Canadians are cutting back on debt amid fears of recession
Steve Randall

Most Canadians held back from increasing their debt burden in 2019 and 1 in 5 say debt repayment is their top financial priority for 2020.

A new poll from CIBC has discovered that 71% are concerned about paying more for household goods in the next year while 55% are worried about a potential recession.

The focus on repayment – with 78% saying it is better to pay down debt rather than build savings – is worrying a third of respondents who are concerned that this strategy means they are not building a nest egg.

"Debt repayment doesn't need to be worrisome; it needs to be managed. 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," said Jamie Golombek, Managing Director, CIBC Financial Planning and Advice.

With 21% citing paying down debt as their financial priority for 2020, most respondents have other priorities including paying bills (18%), growing investments or wealth (13%), saving for a vacation (8%), and saving for retirement (8%).

The low Canadian dollar, low wages/lack of growth, and household debt join inflation as key concerns.

"Whether it's daily household items or unexpected events, expenses can fluctuate for reasons that are often outside of our control. The best way to buffer against uncertainties is to have a financial plan," added Golombek. "A financial expert can help prioritize your needs and prepare for potential economic changes to keep you on track to make your ambitions a reality."