4 things Canadians should stop overspending on if they want to build wealth faster and reduce financial stress

The good news is that you can start building wealth faster by cutting a few unnecessary purchases — especially the ones that drain your funds every month without improving your quality of life. Let’s review four common spending habits Canadians can transform in 2026 to reclaim more savings and financial breathing room.

1. Overspending on housing is one of the biggest wealth traps

Housing is a necessity, but it’s also the single biggest expense for most families. When you overspend on your dwelling, it squeezes everything else in your budget including saving, investing, debt repayment and even everyday spending.

In Canada, the pressure to “get into the market” has pushed many buyers to stretch themselves further than they intended. A recent survey from the Real Estate and Mortgage Institute of Canada (REMIC) found that over one-third of Canadians regret the mortgage they committed to, with 21.8% blaming interest rate hikes that made payments unaffordable and 12.3% regretting being locked into an unfavourable rate (2).

And it’s more than the monthly bill that causes problems, it’s also the way housing dominates household wealth. An Ipsos survey conducted during the pandemic boom found that the average Canadian had 77% of their household wealth tied up in real estate, with the share rising to 89% for Gen Z homeowners (3). When that much money is locked into a single, illiquid asset, it leaves households vulnerable during downturns, especially if rates or prices fall.

Relying on rising home values to carry your financial future also creates a risk: When prices climb, households feel richer. But when they fall, there’s little flexibility. That’s partly why many homeowners feel house poor — they own an asset but have limited cash flow.

A more sustainable approach is to buy or rent below what the bank says you can afford, not at the maximum you qualify for. Keeping housing modest may not feel exciting, but it can lead to much greater financial freedom over time.

If you’re motivated to purchase a home then make sure you shop for a competitive mortgage rate. Using Homewise, an online mortgage consolidator, you can find the best rate from more than 30 lenders in less than 5 minutes.

2. Buying new cars puts the brakes on wealth building more than you think

Brand-new cars have become drastically more expensive in recent years, and Canadians are feeling it. According to data from AutoTrader, the average price of a new vehicle reached over $63,264 in Q3 2025, up from about $51,000 in 2019 (4).

Financing costs have climbed as well. Higher interest rates mean even modest vehicle loans now come with hefty monthly payments. The average monthly payment for a new car are just below $950 per month according to the same AutoTrader report, with the average loan term stretching seven years and beyond (5). Longer loan terms lower the monthly payment, but make it more expensive to own the car overall, leaving many borrowers underwater for years.

Meanwhile, depreciation hits new vehicles the hardest. As soon as a new car leaves the lot, it loses value — about 15% to 30% in the first year on average, and up to 50% or more within five years, depending on make, model and how well it's been maintained (6).

A simpler alternative is to buy a reliable used vehicle. Used cars are still expensive compared with pre-pandemic levels, but they’re significantly cheaper than new models. AutoTrader reports the average used vehicle price in Q3 2025 was $36,911, or $627 per month in loan payments.

Choosing a used car with a reasonable purchase price and shorter loan term frees up money for debt repayment, investing and saving — the actual engines of wealth creation.

3. Luxury travel and experiences drain savings

Fortunately, you can still have fun and build wealth — but it’s hard to ignore how much more expensive it’s become to travel and enjoy big experiences in recent years. According to a report published by the Canadian Press, airline fares were up 19% year-over-year in June of 2024, outpacing overall inflation (7). Higher fuel costs, pilot shortages and strong travel demand have kept prices up for longer than many expected.

Life events have also become pricier. Data from Pollstar shows the average North American concert ticket price rose up to US$136.45 in 2024 (C$187) compared to US$90.96 (C$125) four years earlier, driven by post-pandemic demand and dynamic pricing models (8). For families or young adults with limited disposable income, only a few concerts a year can add hundreds of dollars to the entertainment budget especially when you factor in transportation and parking fees, and babysitting rates for those looking for an adults-only evening.

You don’t need to cancel every vacation or show to be financially responsible. But even modest changes — like taking a trip every other year, choosing shoulder-season travel or prioritizing smaller local experiences — can free up hundreds or even thousands of dollars.