Household debt is going up, but the overwhelming majority of Canadians hope to beat it down in 2012.
Officials with the non-profit financial literacy group, which is funded through Ontario Securities Commission’s fines and settlements, were surprised to see such a focus on debt at a time when Canadians are usually thinking about RRSPs and retirement savings.
But will consumers actually stop consuming and start saving their money for debt repayment?
“It’s nice that they’re acknowledging it, but we’re still not seeing they are doing anything about it,” said Perry Quinton, the IEF’s vice-president of marketing, “What our research shows is that they’re unable to do anything about it because they are kind of paralyzed.”
Ms. Quinton also notes that opening and contributing to RRSP accounts is near the bottom of the financial priorities list, tied for seventh with starting 2012 tax planning - a signal that Canadians face serious hurdles to save for their future.
“They are clearly acknowledging that debt is a barrier to retirement savings,” she added.
The poll, which was conducted in late December, but was released this week, allowed the 653 respondents to select more than one resolution. But debt, which is now at historic highs and has prompted warnings by both the federal Finance Minister and the Governor of the Bank of Canada, was top of mind. The top priorities were:
1: Reduce my debt load (57 per cent)
2: Create an emergency fund (36 per cent)
3: Create a budget to track my spending (35 per cent)
4: Use my credit card(s) responsibly (24 per cent)
5: Set up an automatic savings plan (19 per cent)
6: Open/contribute to my TFSA (10 per cent)
7: Start tax planning for 2012 now (6 per cent)
8: Open/contribute to my RRSP (6 per cent)
9: Pay off my mortgage (1.5 per cent)
10: Lower planner/adviser fees (1.5 per cent)
Priorities have clearly shifted from the previous year’s survey, which showed just 38 per cent of respondents selected pay down debt, which ranked second, just above RRSPs tied with responsible use of credit cards and launching a budget.
“We have a bit of a debt crisis in this country,” Ms. Quinton said, “If debt is a barrier, and we don’t go beyond that barrier, we’re going to have a retirement crisis in this country.”