TORONTO – The rising cost of living and the additional burden of COVID-19 are forcing Canadians to take on more debt, a new survey finds.
The BDO Affordability Index 2021, released Monday, suggests that the quality of life for many Canadians continues to decline as debt accumulates and the pandemic continues.
The poll, conducted by Angus Reid Group in partnership with BDO Debt Solutions, found that 43% of Canadians increased their existing debt due to the pandemic, up 4% from last year.
The survey reports that 26 percent of Canadians have incurred at least one new type of debt, the most common being credit card debt, and 70 percent of these Canadians said the new debt has made their standard of living worse. .
According to the BDO Accessibility Index, only 51% of this group said they would be able to restore their standard of living to pre-pandemic levels.
Nancy Snedden, national leader of the BDO Debt Solutions practice, said in a press release that many Canadians “don’t see the light at the end of the tunnel, which is concerning.”
“This year’s BDO Affordability Index highlights the affordability challenges facing Canadian families more than a year after the onset of the pandemic – and it’s clear many are feeling the combined pressure of the rising cost. of life and the continued impact of COVID-19, ”said Snedden.
The survey reports that increased spending on essentials, lost jobs and declining incomes are also weighing more on the savings of Canadians compared to last year.
Of the 42 percent of Canadians who saved less or not at all during the pandemic, 57 percent said it was due to increased spending on groceries and shelter, while 51 percent said it was. due to lower income or loss of employment. .
BDO reports that the proportion of debt-ridden Canadians with increasing debt has remained stable year over year at 11%. However, among those whose debt is increasing, 70 percent say the main reason is the rising cost of living.
The survey notes that overspending was not a major factor and is in fact down 15% from last year.
The survey found that those who reported saving less or not at all since the start of the pandemic were women (45%), Canadians aged 34 to 54 (48%) and Atlantic Canadians ( 50%).
Additionally, the investigation found that those who relied on government pandemic benefits did so “heavily.”
According to the index, 29 percent of those surveyed have accessed government benefits, and 76 percent of these Canadians describe financial assistance as “very important” or “essential.”
While only four percent of those polled continue to receive benefits related to COVID-19, BDO notes that they depend “deeply” on it, with 65 percent of those Canadians saying they’re not sure they can maintain their benefits. current standard of living once they stop receiving benefits.
RETIREMENT, PROPERTY OUT OF REACH
With household budgets squeezed by higher costs, the poll indicates that 60 percent of Canadians are not on track to retire because of their current retirement savings.
Additionally, BDO reports that Canadians “increasingly face barriers to affordability” when it comes to homeownership, with 45% of Canadians saying housing costs are a “challenge.” .
The survey suggests that the high cost of housing is forcing Canadians to delay homeownership, with almost half saying they are not able to save enough for a down payment.
Canadians are also having more difficulty obtaining essentials than at the start of the pandemic, according to the survey.
According to BDO, 23 percent of Canadians find it difficult to get food on the table for themselves and their families, up four percent from last year.
The survey reports that 31 percent of those polled said paying for utilities is a challenge and 35 percent said the same about transportation and clothing costs.
With that in mind, the poll suggests that Canadians’ priorities for 2022 have changed, with most wanting to save money for emergencies, retirement, and a major purchase like a house, car or cottage.
According to the data, 60 percent of Canadians said their top priority was saving for an emergency fund or nest egg. The index notes that this is a top priority for Canadians aged 18 to 34 (64%) and those earning less than $ 50,000 per year (67%).
The survey reports that saving for retirement is a priority for 51 percent of Canadians, especially those aged 35 to 54 (59 percent), as well as those earning more than $ 100,000 per year (62 percent). hundred).
Spending money on travel (40 percent), non-essential expenses including dining and entertainment (31 percent), and paying off debt incurred by the pandemic (37 percent) will be also the top priorities of some Canadians in 2022, according to the poll.
Snedden says the rising cost of living in Canada “certainly” contributes to the debt load of many people, and said Canadians should not hesitate to speak to a professional, such as a Licensed Insolvency Trustee, about their situation. .
She explained that a Licensed Insolvency Trustee can offer “a full range of debt relief options,” including budgeting, debt consolidation and bankruptcy strategies, to help Canadians “get over their debt. finances on the right track to start anew ”.
“With restrictions easing across the country, the temptation for Canadians to increase spending on non-essentials can be high. But as we look ahead, we continue to stress the importance of paying down debt and staying within household budgets to avoid adding new debt, ”Snedden said in the statement.
METHODOLOGY
The fourth annual BDO Affordability Index, which examines how affordable living is in Canada, was conducted through a randomized online survey of 2,015 Canadians in early September. The interviewees are members of the Angus Reid Forum. For comparison purposes only, a probability sample of this size would give a margin of error of +/- 2.2%, 19 times out of 20. Discrepancies in or between totals are due to rounding, according to BDO.