Debt management top priority in 2012

While Ontario residents have many priorities they want to address heading in the new year, a top financial concern appears to be debt loads, a new poll suggests.

Conducted by Harris/Decima on behalf of the Canadian Imperial Bank of Commerce, nearly 20 per cent of Ontarians said getting a better handle on their debts was their most important financially-related matter in 2012. That's up from 15 per cent when a similar survey was conducted for 2011.

"More Ontarians are recognizing the importance of managing debt as a component of their overall financial plan, and that is driving an increased focus on debt management and day-to-day budgeting entering 2012," said Christina Kramer, executive vice president of retail distribution for CIBC. "Ontario residents are also increasingly seeing the connection between good management of their day to day budget and their longer term financial goals, recognizing that taking smaller steps today as part of a plan can lead to significant benefits down the road."

While better management of debt was a leading financial priority overall, Ontarians' answers largely depended on how old they were. For example, among Ontarians between 25 and 44 years old, 23 per cent said debt was their most pressing financial concern. However, among 45- to 64-year-olds, just 16 per cent called it their top priority. For these individuals, retirement planning was their most significant financially-related matter. Meanwhile, individuals 65 and over said better management of daily spending and budgeting was their top financial issue, with 24 per cent saying as much. 

Commenting on the findings, Kramer said it's not surprising that priorities vary among the different age groups, as each stage of life presents its own unique set of challenges.

"For example, baby boomers have a clear focus on retirement, while Canadians over 65 years of age are focused on cash flow management given that many in this age group have started drawing on their retirement savings," said Kramer.

She added that younger Canadians tend to be more focused on saving for large purchases, such as a mortgage or a down payment on a home.

While managing expenses, paying down debt and retirement planning are all important things to do, they can only take a person so far if they're not part of a larger financial plan, according to financial experts.

Jolene Laing, a wealth advisor for Scotiabank, said that a strong financial plan is one that has measurable and definable goals. For instance, in the course of establishing their goals, Ontarians may want to ask themselves where they want to be in five years. Once they're able to answer this, they should meet with a financial advisor and plan out their short-, medium- and long-term goals. However, their intentions should be quantifiable and measurable. For example, they should know what they're saving for, how much it will cost and how long it should take to get there.

Insufficient planning may help explain why in a separate poll, 61 per cent of respondents said their debts were no lower in 2011 compared to 2010, despite 77 per cent saying becoming debt free was a top priority for them.