If 2025 taught us anything, it’s that many Canadians are still feeling the financial squeeze left by the pandemic. Insolvency filings rose 9.9% year-over-year, with consumer proposals accounting for nearly 79% of those filings—a clear sign that even in challenging times, Canadians are committed to finding solutions and paying down debt.
What drove the rise in insolvency filings?
- Interest Rates: Even after the Bank of Canada cut its policy rate to 2.25%, borrowing costs remained elevated compared to pre-pandemic levels.
- Inflation: Prices didn’t fall as quickly as hoped. In September, inflation sat at 2.4%, with food costs up 3.8% year-over-year.
- Debt Load: Household debt-to-income ratios hovered around 175%, meaning Canadians owe $1.75 for every dollar of disposable income.
- Mortgage Renewals: About 60% of mortgages will renew by the end of 2026, and many homeowners face payment increases of 10–20%.
Looking Ahead to 2026
The outlook for 2026 can be summarized in two words “cautiously optimistic”. Economists expect inflation to settle near 2%, and interest rates to hold steady around 2.0–2.25%. While housing affordability and global uncertainty remain concerns, these trends highlight the importance of checking in on your financial health and planning ahead. To help you start strong, here are five strategies to navigate 2026 with confidence:
Reassess Your Budget Quarterly
Your budget isn’t a “set it and forget it” tool. Rising costs and changing income patterns mean regular reviews are essential.
- Use zero-based budgeting or apps like YNAB and AI-driven tools to track spending.
- Identify “silent drains” like unused subscriptions and discretionary spending.
Build a Stronger Emergency Fund
Even a small emergency fund can make a big difference when unexpected expenses arise.
- Automate savings into a high-interest account.
- Factor in rising costs for housing and utilities.
Prioritize High-Interest Debt
Credit cards and unsecured loans remain costly—even as rates ease.
- Consider solutions like consolidation, consumer proposals, or bankruptcy if payments feel unmanageable. Always consult a professional first.
- Every dollar saved on interest accelerates financial recovery.
Prepare for Mortgage Renewals
If your mortgage renews in 2026, start planning now.
- Stress-test your budget for a 6–20% payment increase.
- Shop around for competitive rates and consider switching lenders.
Maximize Tax and Investment Opportunities
- Contribute to RRSPs and TFSAs to reduce taxable income and grow savings.
- Diversify investments—ETFs, bonds, and balanced funds can help manage risk.
- Avoid chasing trends; stick to your long-term plan.
Final Thoughts
2026 brings an opportunity for renewal and resilience. With inflation easing and rates stabilizing, Canadians have a chance to rebuild stronger financial foundations. Small, consistent steps today can lead to big wins tomorrow—let’s make this the year of financial confidence and growth!
If you’re struggling with debt or feeling overwhelmed, you’re not alone—and help is available. Speaking with a Licensed Insolvency Trustee (LIT) can provide clarity and solutions for your situation. LITs are federally regulated for your protection. Reach out to an LIT near you: https://cairp.ca/find-a-cirp-lit/