Canadians view inflation, cost of living as biggest 2025 financial challenges

But optimism appears to be rising compared with last year

Canadians view inflation, cost of living as biggest 2025 financial challenges

Nearly half of Canadians view inflation and the cost of living as their most significant financial challenges in 2025, according to a new survey by TD Bank Group. The survey revealed that 49% of respondents cited these factors as their primary financial concern, marking a decline of 9% from last year’s findings.

The results indicate a cautiously optimistic shift among Canadians as they head into the new year. A total of 24% of respondents expressed increased confidence in their finances for 2025, up 4% from the previous year.

“As 2024 came to a close with a fifth consecutive interest rate cut from the Bank of Canada, Canadians have responded with increased optimism,” said Emily Ross, vice president of everyday advice journey at TD Bank Group. “Although the cost of living is still clearly a concern for many Canadians and again tops their list of financial challenges for 2025, the survey results indicate that things are moving in the right direction, and Canadians are starting to feel more positive about achieving their financial goals.”

Financial priorities in 2025

The survey outlined Canadians’ financial priorities for the year. Managing daily expenses remained the top focus for 56% of respondents, though this figure declined slightly, down 3% from last year. Other priorities included saving and investing for the future (47%) and paying down debt (30%).

Millennials were particularly focused on reducing debt, with 38% identifying it as a key priority, compared to 21% of Baby Boomers.

When it came to spending, 51% of respondents stated they planned to reduce overall expenditures, a slight decline of 4% from the previous year. Of those who did not intend to cut back further, 42% said they had already trimmed expenses as much as possible. Younger Canadians—those in Generation Z and Millennials—were more likely to feel they had reached their limit in reducing spending, at 49%, compared to 35% of Boomers.

Financial plans and challenges

Despite financial ambitions, many Canadians lack formal financial strategies. The survey found that 61% of respondents did not have a financial plan in place for 2025. Additionally, 63% reported not working with a financial professional, and 70% did not use budgeting tools such as spreadsheets or mobile apps.

When asked about New Year’s resolutions, 61% of Canadians had financial goals, with the top objectives being:

  • Building savings (18%)
  • Paying off credit card debt or reducing overall debt (15%)
  • Cutting back on spending (13%)

“Establishing a financial plan and seeking professional guidance can make a meaningful difference,” Ross emphasized. “Our survey found that those who work with a qualified financial professional are 50% more likely to feel positive about their 2025 finances than those who do not work with one, highlighting the importance of expert advice.”

Among those planning to reduce spending, 63% indicated they would make fewer retail purchases, while 56% intended to limit dining out and food delivery. Other strategies included comparison shopping (52%) and cutting back on entertainment expenses such as concerts and sporting events (41%).

The survey was conducted by Maru Public Opinion on behalf of TD Bank Group and involved 1,143 Canadian adults aged 25 and older. It was carried out between November 4 and November 7, 2024.

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