Canadians ringing in 2024 with ‘big’ money resolutions. How to get a head start

Click to play video: 'The #1 thing to consider as you make your money-related New Year’s resolutions'
The #1 thing to consider as you make your money-related New Year’s resolutions
WATCH: The #1 thing to consider as you make your money-related New Year’s resolutions – Jan 1, 2024

Canadians are ringing in the new year with plans to cut down on spending and make other behaviour changes amid growing recession fears after a year riddled with concerns about inflation, rising interest rates and high cost of living.

New polling by Ipsos conducted exclusively for Global News showed that two-thirds (66 per cent) of the Canadian population is concerned that they will have to delay future plans or life projects like buying a home, starting a family or travelling because of their financial situation.

Nearly 70 per cent are worried they can’t absorb any unexpected costs worth $1,000 or more and over half (53 per cent) are concerned they might not have enough money to put food on the table for their family, according to the poll published Monday.

Heading into 2024, over half (53 per cent) of Canadians said they plan to cut back on eating out, 48 per cent anticipate searching for sales on flyers and 45 per cent said they would spend less on entertainment this year.

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“It’s very worrying to see how on edge people are and how they’re trying to manage just from day to day, everything from reconsidering their holiday spending … to cut(ting) back on doing things like buying clothes, going out to restaurants,” said Darrell Bricker, Global CEO of Ipsos Public Affairs.

Click to play video: 'New BMO report sheds light on spending plans for Canadians heading into 2024'
New BMO report sheds light on spending plans for Canadians heading into 2024

Cost of living is a “universal issue” affecting Canadians across different age groups and provinces, Bricker said.

“It’s not just people living in one province, not people just in one demographic group, although younger people and people who are in the spending stage of their life like Gen X, they’re feeling it a bit more,” he told Global News in an interview.

“But seniors are also pretty worried about whether or not they’re going to be in a position to be able to afford the lifestyle that they thought they could look forward to in their retirement.”

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The Ipsos poll was conducted between Dec. 8 to 11 last year and included more than 1,000 Canadian adults.

Canada’s overall inflation rate held steady at 3.1 per cent in November, according to Statistics Canada, while grocery price hikes — a common theme seen across the country last year — have eased over the past five months.

The Canadian economy contracted in the third quarter of 2023, but has so far managed to avoid a technical recession, which is marked by two consecutive declines in the real gross domestic product (GDP).

Meanwhile, in its final interest rate decision of 2023, Bank of Canada kept its policy rate steady at 5.0 per cent. However, the central bank has warned that future hikes are not off the table.

Click to play video: 'Rising costs taking toll on mental health, causing ‘inflation isolation’: poll'
Rising costs taking toll on mental health, causing ‘inflation isolation’: poll

Financial planning for 2024

Nearly half (47 per cent) of the respondents said in the Ipsos poll that inflation and the cost of living should be the top priority for politicians in 2024.

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On a personal level, 10 per cent said they don’t plan on making any changes to their behaviour due to higher cost of living this year.

For the 90 per cent that do want to make some changes, these include moving someplace cheaper, postponing or cancelling vacations, putting more money into savings and using money that was set aside for retirement.

To get on top of your expenses for 2024, start early and small, said personal finance expert Rubina Ahmed-Haq, who also hosts For What It’s Worth on the Corus Entertainment radio network. Corus is the parent company of Global News.

Click to play video: 'Your Money: navigating inflation, investing and retirement'
Your Money: navigating inflation, investing and retirement

January is a “great time” to hunker down and start the planning process, Ahmed-Haq said.

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Before you make any adjustments to your finances, she advised taking stock of what your current spending looks like by writing down all your expenses for a month. And if you are finding that you don’t have any money left at the end of the month for savings, then try to edit that list, she added.

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Whatever your financial goals, Ahmed-Haq stressed to make them “manageable” and “bite-sized.”

“Money is always a big New Year’s resolution,” she said. “So if you are making money a priority this year, don’t make it overwhelming.”

Manageable goals could be like saving $1,000 by the month of July rather than aiming to save $10,000 for the whole year.

“Being consistent is much more important than actually reaching the goal because that builds that savings habit and that will get you beyond what your goal was,” Ahmed-Haq said.

As long as you are hitting your savings targets, you won’t feel so guilty reaching for your wallet, said Jason Heath, a financial planner with Objective Financial Partners.

“I think one of the best pieces of advice that anybody can consider is to save first and spend the rest,” he said in an interview with Global News.

Click to play video: 'Inflation pushing up the cost of a holiday meal'
Inflation pushing up the cost of a holiday meal

How to prepare for a recession

Some experts are predicting that the economy will slow down this year.

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However, the bar for declaring a recession — which is typically defined as two straight quarters of negative growth — tends to be high with economists looking for broader signs of the downturn.

While it’s still unclear if the country will hit recession or not anytime soon, there are ways Canadians can prepare for it, such as by setting up an emergency fund.

“By the time you hear there’s a recession, arguably things can already be starting to improve,” Heath said.

“I think at any time, whether it’s good times or bad, people should try to make sure they’re avoiding to the extent they can, consumer debt or maintaining an emergency fund,” he advised.

If there is a recession, Ahmed-Haq said the “best thing” that one can do is have manageable debt payments and try to avoid going into more debt.

“If you can afford to do so, (make) lump sum payments on the debt that you already have so that if there is an economic slowdown and if you were to see a stop in your job for any reason, you would have that protection in place already,” she said.

Click to play video: 'Canadian economy avoids technical recession with 0.1% growth in September: StatCan'
Canadian economy avoids technical recession with 0.1% growth in September: StatCan

How to save for big purchases

If a new car or a house is in your future plans of big purchases, it’ll be helpful to prepare well in advance.

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“If you start to plan a year ahead, five years ahead or … many years ahead, like retirement, it can be more impactful because you can plan for those bigger purchases better,” said Heath.

For first-time home buyers, the federal government started making available since last April, the First Home Savings Account, to help Canadians looking to enter the housing market save for a down payment.

Canadians with an FHSA can save up to $8,000 per year in a tax-free account to buy their first home, with a maximum contribution limit of $40,000.

The tax-free savings account (TFSA) that has been available to Canadians since 2009 is another way to save money.

For 2024, Finance Canada has increased the TFSA contribution limits to $7,000 from $6,500 in 2023.

Click to play video: 'Signs of lower interest rates could fuel Canada’s housing market rebound'
Signs of lower interest rates could fuel Canada’s housing market rebound

Diversify your portfolio

Whether you’re investing in the stock market, bonds, cryptocurrency or gold, make sure to seek professional help and diversify your portfolio as much as possible, Heath and Ahmed-Haq said.

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“You can’t just put all your money into one or two or three investments and hope for the best. You need to have a diversified portfolio,” Heath said.

It’s also a good idea to look at your portfolio once at the beginning of the year to see how well you did in the previous year, Ahmed-Haq said, and then make changes accordingly.

Click to play video: 'Gold rush: Price of commodity on a tear amid questions about health of banking system'
Gold rush: Price of commodity on a tear amid questions about health of banking system

From mutual funds, exchange-traded funds, individual stocks and bonds to real estate and index funds, there are many options to consider, Ahmed-Haq said.

She said what your portfolio will look like will depend on your age and risk tolerance.

“There’s so many ways that you can get on the investment ladder. You just have to figure out which one is best for you, and which one will allow you to sleep better at night.”

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How to save on groceries

While food inflation is slowing, the 2024 Food Price Report by Canadian researchers estimates food prices will go up by 2.5 to 4.5 per cent this year, which is still below the five to seven per cent that was forecast for 2023.

To cut back on the grocery bills, Ahmed-Haq advises making a grocery list before you leave the house.

And when you’re making that list, do a quick inventory of what is already in the fridge, pantry and cupboards.

This will also cut food wastage and help avoid spontaneous purchases, she said.

Having a list “just keeps you more focused on making sure that you’re not doubling and tripling the items that you already have in your fridge or in your pantry.”

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Click to play video: '‘Skimpflation’ hits grocery store aisles amid rising inflationary pressures'
‘Skimpflation’ hits grocery store aisles amid rising inflationary pressures

Lowering food waste is a “low hanging fruit” when it comes to saving dollars, Heath said.

More than a quarter (26 per cent) of Canadians said in the Ipsos poll that this year they plan to switch to what they think is a cheaper grocery store than their regular one. Almost 30 per cent also anticipate eating less meat to cut costs, while 27 per cent plan to buy fewer fresh fruits and vegetables, the poll showed.

Better meal planning, freezing food, cooking at home rather than buying prepared items from the grocery stores, avoiding eating out and ordering in are other ways to cut your food expenses, Heath said.

After a challenging year, Canadians can be hopeful for some stability in the new year, experts say, and getting a head start on your finances can go a long way.

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— with files from Global News’ Anne Gaviola and Craig Lord

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