Top reasons for taking on more debt? Day-to-day expenses beyond monthly income and loss of income
Fewer than one in four (24 per cent) of Canadians believe that their financial situation will improve in 2021, compared with 32 per cent for 2020, according to a report from CIBC.
And for the 11th straight year, paying down debt remains the number one financial priority for Canadians heading into the new year (20 per cent), followed closely by keeping up with bills or “getting by” (18 per cent).
Pessimism about the new year is driven by concerns about a possible economic downturn (78 per cent, up from 55 per cent in 2019), according to the survey of over 3,000 Canadian adults in November.
Top concerns for many over the next 12 months include inflation and the rising costs of goods (60 per cent) and slow overall economic growth (34 per cent). More than seven in 10 (71 per cent) Canadians say the current environment is also making it difficult to plan ahead.
"Canadians have faced so many challenges this year, it's understandable they are concerned about the economy in 2021,” says Carissa Lucreziano, vice-president of CIBC financial and investment advice. “If this year has taught us anything, it's that we don't always know what's coming next and the best buffer for the unexpected is to be prepared with a plan and be open to adjusting it when circumstances change.”
More than four in 10 (43 per cent) of respondents say their personal finances have been negatively impacted by the pandemic. Among them, 52 per cent say they don't have the advice and information they need to get their finances on track, and 46 per cent believe it will take more than 12 months to recover.
Also, 74 per cent of respondents say they held back from borrowing more in 2020.
Income issues
The top reasons for taking on more debt in 2020? Day-to-day expenses beyond their monthly income (39 per cent) and loss of income (27 per cent).
For 2021, only 19 per cent plan to boost pay greater than an annual cost-of-living adjustment, while 29 per cent are not planning on salary increases, according to a report from Hays. Worse, six per cent plan to reduce salaries this year, according to a survey by Gallagher released in November.
A separate 2020 survey by Randstad USA found that 62 per cent of employees expect a pay raise every year in order for them to stay at their current company. This is down from 66 per cent for 2019 and 82 per cent for 2018.
More than six in 10 (63 per cent) also say they would leave their role to find an equivalent position at a different company just to make a salary jump that they won't receive if they stay at their current company. This is true for both men (66 per cent) and women (60 per cent), found the survey of 1,200 employees conducted in June 2020.
