Canadians are drowning in debt — and the safety net most of us are counting on is quietly disappearing

But here's the part that should give all of us pause: The confidence Canadians feel about actually pulling it off is dropping. Only 70% of Canadians say they are optimistic about achieving their financial goals this year — down from 76% a year ago (2) and just 55% say they feel prepared to weather an unexpected financial hardship, compared with 59% the year before.

That slow erosion of financial resilience isn't just a polling blip. It's being echoed across multiple recent surveys — and the picture they paint together is one of a country trying hard to stay afloat.

The broader picture: Optimism and anxiety, almost evenly split

A separate Financial Flexibility Poll from the Royal Bank of Canada (RBC) found Canadians entering 2026 were sharply divided (3):

• 49% say they feel optimistic, resilient or unconcerned about their finances
• 47% describe themselves as anxious, exhausted or frustrated
• Nearly 8 in 10 cited everyday costs as their single biggest barrier to reaching their financial goals.

Among those who do feel confident, the RBC poll found they share a few things in common (4):

• Half have actively reduced or paid off debt
• 44% are following a budget
• 58% are investing through a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP)

In other words, the Canadians winning with money right now aren't doing anything exotic — they're executing the basics.

Cuts are getting serious in 2026, with 2 in 3 Canadians actively cutting back

A January 2026 survey from TD Bank Group found two-thirds (67%) of Canadians plan to cut their spending this year — a significant jump from 51% who said the same heading into 2025 (5). Nearly 6 in 10 say they intend to trim their monthly budget by up to C$1,000.

The cutbacks being planned are telling. Topping the list:

• eating out less often (55%)
• making fewer retail purchases (53%)
• spending less on entertainment (44%)
• switching from name-brand to store-brand products (39%)
• One in four Canadians (25%) say they're even taking on a side hustle or part-time work to keep up.

Despite all those intentions, only 36% of Canadians actually have a formal financial plan for 2026 (6) — a gap that speaks to what TD vice-president Joe Moghaizel called "the money map gap." According to Moghaizel, a missing money map highlights how smart priorities with no clear road typically translate into missed targets and incomplete goals. "Intentions are a great first step," he said in a statement, "but turning them into action is what truly makes the difference."

Debt anxiety is running just below the surface

Even as some Canadians report slightly more breathing room at month-end, the MNP LTD Consumer Debt Index found the average amount left after all bills are paid has risen to C$907, up C$163 from last quarter (7) — the forward-looking picture is far more unsettling.

The MNP LTD Consumer Debt Index, the country's most comprehensive quarterly measure of debt sentiment, found that 71% of Canadians expect the cost of living to worsen in 2026 (8). More than half (59%) expect the economy overall to deteriorate and housing affordability to get worse. And nearly two-thirds (64%) say they urgently need interest rates to come down (9).

Even if rates do drop, relief may be limited: nearly half of Canadians (48%) say they're concerned they couldn't repay their debts regardless, and more than 2 in 5 (44%) worry that any future rate increase could push them toward bankruptcy (10). Only 11% of Canadians struggling financially say they've reached out to a professional for help — despite government-regulated Licensed Insolvency Trustees (LITs) being available coast to coast.

"Many Canadians believe that household finances will come under increasing pressure, fueling heightened anxiety about economic security in the year ahead," said Grant Bazian, president of MNP LTD, the country's largest insolvency firm, in a statement (11). "Canadians expect most aspects of daily life to worsen rather than improve in 2026."

Ways to pay down your debt faster

Paying down debt can feel overwhelming — even anxiety-inducing. But there are smart, strategic approaches that work no matter how large your balance.

The debt snowball: Pay off your smallest debt first, then roll that freed-up payment toward the next-smallest. Popularized by American personal finance personality Dave Ramsey, this method delivers quick wins that build momentum — and confidence.

The debt avalanche: Target your highest-interest debt first. It costs you less over time and is mathematically the most efficient path out of debt.

Which one suits you depends on your personality. Numbers-first? Go avalanche. Need to celebrate small wins to stay motivated? The snowball might keep you on track.

Try debt consolidation

If you're carrying high-interest debt — credit card balances in particular — a balance transfer to a promotional low- or zero-interest offer can dramatically reduce what you owe each month. Just be sure you can pay off the full transferred balance before the promotional rate expires.