IG Wealth attributes the divergence between financial confidence and declining trust in the economy to Canadians taking the initiative to improve their financial literacy and, in turn, their financial circumstances. · Natalia Lebedinskaia via Getty Images
Many Canadians are feeling more optimistic about their personal finances even as their faith in the broader economy declines, according to IG Wealth Management’s latest Financial Confidence Index.
The report indicates that confidence in personal finances has surpassed its historical average for the first time since 2021, despite ongoing affordability challenges and low trust in government and economic institutions.
Currently, there’s a great deal of uncertainty surrounding the U.S. and tariffs, leaving Canadians feeling powerless about how these conflicts will unfold. There’s also dwindling trust in how large entities, such as provincial and federal governments, and the Bank of Canada, will help and protect Canadians from any financial fallout, says Christine Van Cauwenberghe, head of financial planning at IG Wealth.
IG Wealth attributes the divergence between financial confidence and declining trust in the economy to Canadians taking the initiative to improve their financial literacy and, in turn, their financial circumstances. The index suggests individuals can build confidence through financial education, either with the help of an advisor or on their own, even in an uncertain economy.
Van Cauwenberghe compares the trend to personal fitness.
“Our food system is perhaps not that healthy, and there are toxins in the air, but that individual who works out every day and eats healthy, they feel that their personal physical fitness is pretty good because of the individual actions they’ve taken,” she said.
“So if more people are taking care of their financial health, there could be slightly more confidence among those individuals, even though there’s not as much confidence in the overall economy.”
While the findings aren’t representative of every Canadian, many have likely accepted that prices will continue to climb, and have learned to adjust accordingly to a higher cost of living, Van Cauwenberghe says. These actions might include tightening personal budgets and making more considerate financial decisions.
Additional data from a CIBC analysis back up this sense of personal financial stability. According to economist Benjamin Tal, household credit health remains relatively strong, with insolvencies returning to pre-pandemic levels and more borrowers opting for consumer proposals rather than filing for bankruptcy. Average credit scores remain above 2019 levels, and credit utilization has held steady, suggesting that many Canadians are managing their debt loads despite higher costs.
It’s also possible that Canadians are adapting because they’re earning slightly higher wages and accessing more advice, whether from an advisor or the internet, Van Cauwenberghe says.
Women, Indigenous peoples and residents of Quebec, historically lower-scoring groups, all displayed an increase in confidence this year. It may be that the Canadian advisor network has expanded to better represent these demographics, making individuals more likely to seek out financial guidance, Van Cauwenberghe says.
There are also fewer barriers to attaining information yourself online, she adds.
“When people don’t have financial confidence, it does impact their financial decisions,” she said. “It impacts whether or not they’re willing to make large purchases, buy homes, buy cars and invest in businesses, so you want people to feel confident.”
Without that confidence, individuals may be unable to live the lives they want — and may later realize they missed out on opportunities that were within reach.