Many Canadians focused on tackling debt: report
Credit card company stickers on a door. (David Goldman / AP)
Published Tuesday, August 2, 2016 3:00PM EDT
Thirty per cent of Canadians say their top financial priority is to reduce or eliminate debt, according to a new study.
The BMO Wealth Management report released Tuesday found 24 per cent of respondents said their top priority is investing efficiently and 23 per cent said saving more was most important. Budgeting (14 per cent) and spending on personal needs or goals (4 per cent) lagged well behind.
Personal debt is an ongoing concern for both consumers and economists alike. According to Statistics Canada, Canadians owe $1.65 for every after-tax dollar they earn.
The BMO report, The Personal Balance Sheet, set out to examine how Canadians adapt financially as they move through life stages.
BMO found that 35 per cent of millennials (18- to 34-year-olds) are most concerned about saving more, while those over 55 were most concerned with investing efficiently. The top answer for those in between, ages 35 to 54, was reducing or eliminating debt.
“Financial needs and goals are always changing as people move from one life stage to the next, so it’s important to have the flexibility to adapt your financial strategy accordingly,” said Chris Buttigieg, senior manager of wealth planning strategy at BMO Wealth Management.
“It’s a good idea to re-evaluate your financial plan on a regular basis to ensure your saving, investing, borrowing and spending are in balance as priorities shift over time.”
Across all age groups, 29 per cent of respondents are concerned they will not be able to save enough to reach their financial goals. Millennials (35 per cent) were most likely to have this worry.
Thirty-one per cent of those over 55 said they fear outliving their money.
Canadians reported the following events had made it difficult for them to save or invest to achieve their financial goals:
• Stock market losses (36 per cent)
• Failed business ventures (23 per cent)
• Divorce or separation (18 per cent)
• Financial loss on a property sale (13 per cent)
“These types of financial losses weigh on people’s minds and may make them more tentative, fearful or hesitant to prepare for the future,” said Buttigieg.
“If you experience a financial setback, a financial professional can help you re-establish control over your finances by re-orienting your strategy. This can include introducing plans to reduce, consolidate or eliminate specific debts, or recommending different approaches to saving and investing to help you refocus your financial goals.”
When it comes to spending, half of Canadians said they have a budget in place, and 65 per cent said they have reduced household spending.
On the savings side, the survey found 48 per cent of Canadians have funds set aside in an emergency fund, 42 per cent use an automatic savings program but that 29 per cent have cashed in savings or investments to pay expenses.
The survey was conducted by ValidateIt for the BMO Wealth Institute between April 13–18, 2016. The online sample size was 1,018 Canadians aged 18 and older. Overall probability results for a sample of this size would be accurate to within +/– 3.07 per cent 19 times out of 20.