More than three-quarters of Canadians entered 2018 optimistic about their finances; however, nearly three in five admit their confidence would wane if interest rates go up again, according to a recent survey conducted on behalf of Toronto-based Canadian Imperial Bank of Commerce (CIBC).
In addition to rising interest rates, 70% of Canadians surveyed also expressed concerns about the effect of higher food and utility costs on their finances, and how that might impact their savings.
“This poll offers a glimpse into the financial psyche of Canadians who say they feel confident about their finances, but are actually very worried about bumps in the year ahead that could derail their goals,” says Jennifer Hubbard, managing director of financial planning and advice at CIBC.
“Given that household debt remains at record highs, it’s no surprise that Canadians are concerned about even the slightest change that might affect their finances. The best way to weather uncertainty is to have a solid financial plan in place to help manage any challenges ahead.”
The key findings of the study include:
> The majority of survey respondents (77%) feel confident they’ll be able to achieve their 2018 financial goals, with 23% saying they are “very confident” and 54% feeling “somewhat confident.”
> Men are more confident than woman about their finances, with ratings of 82% and 72%, respectively.
> More than half (59%) of Canadians surveyed would feel “significantly less” confident if interest rates go up.
> A large number (70%) of respondents worry they’re not saving enough.
Among respondents who are more self-assured in their finances, their confidence grows from a rising stock market (29%), minimum wage increases (21%), and moderate economic growth (17%). Notably, 37% of men say the rising stock market increases their confidence while only 21% of women feel the same way.
Furthermore, the minimum wage increase appears to be making millennials more optimistic about their financial future — among respondents aged 18 to 34, 31% say the minimum wage increase is boosting their confidence.
“What’s particularly striking is the difference in financial confidence and optimism levels between women and men, which points to the need for a greater understanding on how to narrow the gap,” Hubbard says. “There could be many reasons for this disparity, ranging from pay equity to self-doubt about how to best manage their money.
The best way for Canadians to increase their confidence in times of uncertainty, Hubbard adds, is to work with an expert who can put the current economic climate into context while also helping to develop a financial plan.
The financial confidence poll was conducted online among 1,524 randomly selected adults on Dec. 11 and Dec. 12, 2017.