TORONTO, ONT – For the ninth year debt repayment is number one as a financial priority for Canadians.
Findings from a new CIBC poll goes on to share 29 percent of Canadians have taken on more debt in the past year due to day to day expenses attributing to the mounting debt.
39 percent of Canadians do worry they are focusing too much on their debt and not contributing to savings yet the majority of 84 percent believe it is better to pay down debt than build savings.
Statistics Canada recently reported the average Canadian household owes $1.78 for every dollar of disposable income. With 63 percent of Canadians fearing the stock market has reached a peak, so these people may be motivated to focus more on debt than savings, a CIBC report states is based upon emotions and not fact.
“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
“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,” said Golombek
Tips for making your money go further in 2019 by Jamie Golombek;
- Write down your income and expenses – for a three month period to determine if your cash flow is positive (money left over), neutral (no extra or shortage) or negative (short on income to cover expenses).
- Make a plan – If you’re cash-flow positive, use the extra cash to pay off high-interest debt — not your mortgage — first. Next, you’ll want to use the surplus to build long-term savings in an RRSP or TFSA for yourself and put away a little extra for the kids in an RESP. Lastly, if your long-term savings are on track, consider increasing your mortgage payments. If you’re cash-flow neutral or negative, look for ways to cut expenses or lower interest by consolidating debt at a lower rate.
- Automate your plan – Time your savings or debt-repayment plan with your payroll. Putting money directly to your goals right off the top can help you both achieve your goals and get by with less.
- Review and prioritize your goals – You likely have many goals competing for your wallet. Meet with an advisor to build a financial plan that gets you on track to achieving what’s important to you today and the many years ahead.