TORONTO – Rising costs of living and the added burden of COVID-19 are forcing Canadians into further debt, a new survey suggests.
NS 2021 BDO Affordability Index, released on Monday, suggests that the quality of life of many Canadians is further diminishing as more debt accumulates and the pandemic continues.
The survey, conducted by the Angus Reed Group in partnership with BDO Debt Solutions, found that 43 per cent of Canadians added to their current debt due to the pandemic, up four per cent from last year.
The survey reported that 26 percent of Canadians took out at least one new type of debt, the most common being credit card debt, and 70 percent of these Canadians said the new debt made their standard of living worse. .
According to the BDO Affordability Index, only 51 percent of this group said they would be able to restore their standard of living to pre-pandemic levels.
- Newsletter sign-up: Get the COVID-19 brief sent to your inbox
Nancy Snedden, national leader of the BDO debt resolution exercise, said Press release That many Canadians “are not seeing a light at the end of the tunnel, which is cause for concern.”
“This year’s BDO Affordability Index underscores the affordability challenges facing Canadian families more than a year into the pandemic – and it’s clear that many people are struggling with the rising cost of living and the spread of COVID-19. are feeling the combined pressure of the impact,” Snedden said.
The survey report said increased spending on essentials, job losses and declining incomes are also having a greater impact on Canadians’ savings than in the past year.
Of the 42 percent of Canadians who were saving little or no savings during the pandemic, 57 percent said it was due to increased spending on groceries and housing, while 51 percent said it was due to low income or housing expenses. It was due to job loss. .
The BDO reports that with rising debt the proportion of Canadians in debt has remained steady at 11 percent year-on-year. However, 70 per cent of those whose debt is rising say that this is mainly because of the rising cost of living.
The survey said that higher spending was not a major factor and is in fact 15 per cent lower than the previous year.
The survey reported that those who said they were saving less or not saving at all since the start of the pandemic were women (45 percent), Canadians 34 to 54 (48 percent) and Atlantic Canadians (48 percent). 50 percent).
Furthermore, the survey found that those who relied on government pandemic benefits did so “heavily”.
According to the index, 29 percent of those surveyed received government benefits, and of these, 76 percent describe Canadian financial aid as “very important” or “necessary.”
Only four percent of those surveyed continue to benefit from COVID-19, with the BDO saying they are “deeply dependent” on them, with 65 percent of these Canadians reporting they are unsure whether They can once maintain the existing standards of living. Stop taking benefits.
Retirement, home ownership out of reach
Because of the high cost to household budget, the survey reported that 60 percent of Canadians are not on track to retire based on their current retirement savings.
In addition, the BDO reports that Canadians “are increasingly facing affordability barriers” when it comes to home ownership with 45 percent of Canadians saying the cost of housing is a “challenge.”
Surveys show that the high cost of housing is forcing Canadians to discontinue home ownership, with almost half saying they are unable to save enough for a down payment.
According to the survey, Canadians are also facing more difficulties in meeting needs than before in the pandemic.
The BDO says 23 percent of Canadians find it challenging to keep food on the table for themselves and their families, up four percent from last year.
The survey reported that 31 percent of those surveyed indicated that paying for utilities is a challenge and 35 percent said the same about the cost of transportation and clothing.
With this in mind, the survey shows that Canadians’ priorities have changed for 2022, with most people looking to save money for emergencies, retirement, and big purchases like a home, car or cottage.
According to the data, 60 percent of Canadians said that their priority is to save for an emergency fund or Nest Egg. The index suggests this is a major priority for Canadians between the ages of 18 and 34 (64 percent) and those earning less than $50,000 a year (67 percent).
The survey reports that saving for retirement is a priority for 51 percent of Canadians, especially those between the ages of 35 and 54 (59 percent), as well as those who make more than $100,000 a year (62 percent).
Spending money on travel (40 percent), non-essentials including eating out and entertainment (31 percent), and paying off debt incurred by the pandemic (37 percent) will also be top priorities for some Canadians in 2022. Survey.
Snedden says the rising cost of living in Canada is “definitely” contributing to many people’s debt, and added that Canadians should not hesitate to speak to a professional such as a licensed bankruptcy trustee about their situation. needed.
She explained that a licensed bankruptcy trustee can provide “a full range of debt relief options,” including budgeting strategies, debt consolidation and bankruptcy, to help Canadians “get their finances on track to start fresh.” get help.”
“With the easing of restrictions across the country, the temptation for Canadians to increase spending on non-essentials may be greater. But as we look ahead, we are looking to pay off debt to help avoid adding new debt.” and stress the importance of adhering to the household budget,” Snedden said in the release.
The fourth-annual BDO Affordability Index, which examines how cheap life is in Canada, was conducted in early September through a random, online survey of 2,015 Canadians. Angus Reid, who conducted the survey, is a member of the Forum. For comparison purposes only, a probability sample of this size would give a margin of error of +/- 2.2%, which is 19 times out of 20. According to BDO, discrepancies in or between totals are due to rounding.