Savings slide as Canadians focus on paying down debt

If your new year's resolution is to get a handle on your debt, you're not alone.

With mounting household debt and interest rates on the rise, an annual CIBC poll found that paying down debt is again Canadians' top financial priority.

Yet, with inflation outpacing earnings and outliving our assets a growing concern, it's more important than ever to save.

“While getting a handle on any high-interest debt is vital, don't let your debt get in the way of saving. Both are critical to your overall financial health,” says David Nicholson, vice president at CIBC.

Nicholson offers these tips to ease the debt burden while building savings:

Pay high-interest debt. Store credit cards can have interest rates as high as 30 per cent, making it critical to pay down this debt first.

Commit to saving something each month. Look at your income and expenses to determine how much you can afford to cut back each month. Set that amount aside in a dedicated high-interest savings account and challenge yourself to save a little more each month.

Make your savings plan automatic. Pay yourself first by enrolling in an employer-sponsored savings plan or setting up an automated transfer into a high interest or tax-free savings account on the day your paycheque is deposited to prioritize saving and limit your spending to only what's left over.

Speak to a financial expert. They can help you convert your new savings and debt repayment into a larger financial plan that helps you manage everyday expenses and gets you on track towards longer term goals like a dream vacation or retirement. Create an investment plan to make the most of your money and take advantage of any tax savings.