Canadians are rethinking their financial plans

CPA Canada

'Weaponized uncertainty’ sparks shifts in economic priorities from coast to coast

A staggering 83 per cent of Canadians have altered their financial plans in response to growing economic uncertainty at home and abroad, according to CPA Canada’s new Economic Uncertainty Study.

Produced in partnership with BDO Debt Solutions, the study launched in February to measure rising anxiety about Canada’s economy. From turbulent cross-border relations, and trade tensions with the U.S., to an ever-weakening Canadian dollar, the results confirm that ongoing volatility is contributing to financial fear among Canadians, which is driving most to react in ways CPA Canada’s experts warn may not always be financially sound.

“Pervasive instability is reshaping financial decisions across Canada,” says CPA Canada’s chief economist David-Alexandre Brassard, who describes the problem as “weaponized uncertainty” sowing panic among Canadians across all income and age brackets. With three out of four respondents reporting that the current economy is directly influencing their financial outlook, Canadians are certainly feeling the need to protect their finances now more than ever.

Cost-cutting is at the forefront, with 66 per cent of Canadians reducing their expenses in response to economic uncertainty. Since only 24 per cent are prioritizing debt repayment — one of the most critical factors in long-term financial stability — experts warn that cost-cutting alone isn’t enough.

“Cutting back on spending is a positive step, but without a focus on debt repayment, financial stress will continue to build,” says Nancy Snedden, CPA and President of BDO Debt Solutions. “We know many Canadians are struggling with credit card debt, and without a plan to pay it off, they risk larger financial problems down the road.”

Problems like inflation and the rising cost of living remain top concerns for 40 per cent of Canadians, with particular emphasis on food and energy prices. However, younger Canadians aged 18-34 are mostly worried about housing affordability, which at 36 per cent overtakes all other concerns for this group. Whether dealing with high rent or home prices, many respondents feel the strain of the housing market’s supply and demand crisis.

Confidence shaken by domestic and global factors

Unstable domestic affairs, such as the Prime Minister’s recent resignation, prorogation of Parliament and urgent policy delays, have all contributed to growing confusion and concern among Canadians. Meanwhile, global trade tensions continue to weigh on consumer sentiment. U.S. tariffs are raising significant concerns about their effect on Canadian businesses and, by extension, the labour market and economy.

“Although Canada’s job market entered these tensions on solid footing, the potential fallout from renewed trade conflicts remains a serious risk to future employment gains,” says Brassard.

Wage growth has slowed to 3.5 per cent year-over-year, signaling that inflationary pressures from wages are easing. While this offers some relief, Brassard notes that the broader impact of tariffs remains a significant threat to both industry stability and employment opportunities in trade-dependent sectors.

As we watch for the effects of President Trump’s aggressive trade policy, Canadian manufacturers and the workers they employ could bear the brunt of a trade dispute that shows no signs of abating,” says Brassard.

Financial caution: Not just inflation, but insecurity

While inflation remains a driving factor behind financial caution, many Canadians are focused on safeguarding their financial futures amid this increasing uncertainty.

“Canadians are bracing for worst-case scenarios, adjusting their financial plans to safeguard against potential downturns,” says Li Zhang, financial literacy leader at CPA Canada.

Despite widespread concern, the survey reveals a notable contrast in financial resilience between generations. Only 22 per cent of Canadians aged 55 and over report feeling better about their finances than last year, compared to 35 per cent of younger Canadians.

"Unfortunately, this generational divide points to how fragile older generations view their financial situation, many of whom are worried they have insufficient retirement savings or may face higher healthcare costs,” says Zhang.

Although Canadians are adjusting their spending habits, there remains a significant gap in financial readiness. Many may not fully grasp that even as inflation slows, prices are unlikely to return to “normal.”

“When we talk about inflation and the rising cost of living, it’s important to remember that prices don’t typically go down,” Zhang explains. “If a bag of frozen corn went from $1.99 to $2.99, even if inflation drops, it won’t go back to $1.99. This is the new normal, and consumers need to factor it into their financial planning.”

Financial literacy remains key for long-term stability

Financial strain is pushing some Canadians into difficult trade-offs. CPA Canada’s survey data shows that while only one-quarter of Canadians prioritize paying down debt, 14 per cent continue to maintain savings, despite reports of high-interest debt levels across the country.

“For some, the idea of not having any savings feels like failure, even when paying over 20 per cent interest on a credit card,” says Zhang. “It may not be rational from a numbers perspective, but money is deeply emotional. Carrying debt has become normalized in Canada, and many people prioritize saving even when it would be more financially smart to pay down what they owe instead.”

As Canadians face ongoing economic anxiety, financial literacy and strategic debt management have become more critical than ever. Short-term relief from spending cuts may ease immediate pressures, but CPA Canada’s experts urge Canadians to take a long-term view of their financial health. Financial stability is not just about reducing costs and increasing savings, it’s about proactively managing debt and preparing for future uncertainty.