Canadians’ confidence in their personal finances and ability to repay debt hits lowest level on record

MNP Consumer Debt Index drops 7 points to record high amid pandemic fatigue and uncertainty

  • Forty-five percent are not convinced that they will be able to cover their living expenses this year (+5 points).
  • Four out of ten say they are concerned about their current level of debt (43%, +5pts).
  • Less than three in ten (27%) are confident in their ability to deal with unforeseen events without increasing their debt.
  • Two in ten think their current debt situation is worse than a year ago (16%, +4pts).

CALGARY, Alberta, Jan. 17, 2022 (GLOBE NEWSWIRE) — Canadians are showing record levels of confidence in their personal finances and ability to repay debt. The MNP Consumer Debt Index, now in its 19and wave, hit the lowest point since its inception, dropping seven points since last quarter to 88 points. Produced quarterly by Ipsos on behalf of MNP LTD, the index tracks Canadians’ attitudes towards their debt situation and their ability to meet their monthly payment obligations.

Compared to last quarter, far fewer Canadians are confident they can comfortably cover their living expenses over the next year (55%, -5 points) and far more are concerned about their current level of debt (43%, +5 dots).

“Nearly two years into the pandemic, Canadians’ financial confidence is at an all-time high as household debt becomes increasingly worrisome,” said Grant Bazian, chairman of MNP LTD, the world’s largest investment firm. insolvency of the country. “Canadians’ financial optimism generally wanes as holiday bills come due, but this year more than any other, Canadians are feeling more financially insecure, likely due to the Omicron variant and pandemic fatigue that as a result, as well as rising inflation and the potential for higher interest rates this year.

As the uncertainty surrounding the coronavirus persists and so many Canadians feel financial anxiety, many more are uncomfortable when it comes to financially preparing for unexpected expenses. Less than three in ten (27%, -2pts) are confident in their ability to cope with life-changing events without increasing their debt. More than a quarter (26%, +5pts) are not confident in their ability to cover an unexpected car repair. One in three (33%) are worried about facing a job loss or a change in salary or seasonal work, a jump of three points since September. Around the same number (32%, +4pts) are unsure whether they can financially cope with an illness that renders them unable to work for three months. Similarly, Canadians are slightly less confident in their ability to cope with a change in their marital status (27%, -1pt), or to cope with the death of a member of their immediate family (22%, -3pts), or to pay for either their own training or that of someone else (21%, -3pts).

“It is increasingly difficult for Canadians to see the light at the end of the tunnel. Unforeseen expenses are a major contributor to household financial turmoil, and many are starting the new year facing another round of unexpected business closures, reduced work hours or job loss and COVID-related health issues,” says Bazian.

Almost half (46%) of Canadians say they are $200 or less away from being able to meet all of their financial obligations, unchanged from last quarter. This includes nearly three in ten (27%, unchanged) who say they already don’t earn enough to cover their bills and pay their debts. Worse still, three in ten (31%, +2 pts) say it is even more difficult to repay their debts, and two in ten (20% +3 pts) say it has become much less affordable to put money aside to save.

“We have seen households resort to credit to make ends meet as their finances have stretched during the pandemic. With the rising cost of living, households that were already overburdened may feel like they have to take on more debt just to afford basic necessities,” says Bazian.

Compared to the same time last year, more Canadians are adopting what many debt professionals consider ‘bad financial habits’, such as paying only the minimum balance on their credit card (21%, +3pts) or borrow money they cannot afford to pay back quickly (11%, +1pt). They are more likely to say they were attracted by deals or offers on special days like Black Friday this year (12%, +4pts). Additionally, six in ten Canadians (59%, +1pt) cite low interest rates as a catalyst for buying things they otherwise couldn’t afford, up slightly from last quarter.

While worries about inflation and the cost of living preoccupy many Canadians, two in ten (16%) believe their debt situation is worse than a year ago, a striking four point increase since September. Four in ten Canadians (45%, unchanged) say they regret the amount of debt they have taken on. Looking ahead five years, more Canadians seem apprehensive about the road ahead, with one in ten (10%) believing their debt situation will get worse, a three-point increase .

“As interest rates have remained low in 2021, Canadians have taken advantage of great rates to make purchases that would not normally have been in their budget. Now add the pressure of holiday bills coming due and potential interest rate hikes around the corner, and you can see how many Canadians are approaching a tipping point,” says Bazian. “What separates those who experience stability and peace of mind is their ability to act when they see warning signs of financial difficulty. Rather than taking on more debt to make ends meet, those who who find themselves unable to pay their bills should seek advice from a debt professional.

Licensed Insolvency Trustees are the only federally regulated debt professionals who can offer advice on all debt relief options available to Canadians. They provide personalized and unbiased advice to help individuals make informed choices to manage their debt responsibly.

“Fighting debt alone can feel extremely isolating, but it doesn’t have to be. By speaking with a professional, Canadians can avoid the stress and anxiety caused by spiraling debt, creditor or collection calls, wage garnishments and tax issues. Asking for help at the first sign of trouble, even an early missed payment, is the best first step to financial stability,” says Bazian.

Canadians can get a free, confidential assessment of their financial situation from an MNP LTD Licensed Insolvency Trustee. As the only government-regulated debt professionals, they offer a full range of debt relief options, including consumer proposals, informal debt settlements, and bankruptcies.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is Canada’s largest insolvency firm. For over 50 years, our experienced team of Licensed Insolvency Trustees and Advisors has worked with individuals to help them recover from periods of financial difficulty and regain control of their finances. With more than 240 Canadian offices coast to coast, MNP helps thousands of Canadians each year struggling with crippling debt. Visit DebtMNP.ca to contact a Licensed Insolvency Trustee or use our free service Do-It-Yourself (DIY) Debt Assessment Tools. For regular and succinct overviews on debt and personal finance, subscribe to the MNP’s 3-Minute Debt Reduction Podcast.

About the MNP Consumer Debt Index

the MNP Consumer Debt Index measures Canadians’ attitude towards their consumer debt and assesses their ability to pay their bills, afford unexpected expenses and absorb fluctuations in interest rates without approaching insolvency. Produced by Ipsos and updated quarterly, the index is an industry-leading barometer of financial pressure or relief for Canadians.

Now in her 19and wave, the index fell seven points from last quarter to 88 points, the lowest reading on record since its inception in June 2017. Visit DebtMNP.ca/CDI to learn more.

The latest data, representing the nineteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between 1 and 7 December 2021. For this survey, a sample of 2,000 Canadians aged 18 and over were interviewed. Weighting was then used to balance the demographic data to ensure that the composition of the sample reflects that of the adult population according to census data and to provide results intended to approximate the universe of the sample. The accuracy of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, if all Canadian adults had been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including but not limited to coverage error and measurement error.

A summary of some of the provincial data is available upon request.

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Tana T. Thorsen