The level of confidence Canadians have in their ability to manage debt has reached an all-time low, according to MNP’s most recent Consumer Debt Index.
As many continue to experience economic struggles due to Covid-19, the MNP Consumer Debt Index fell to 89 points, its lowest score since its June 2017 inception. It also experienced its sharpest quarterly decline, dropping five points since September, due to Canadians’ negative perceptions of their personal finances, household debt levels, and whether they could manage unexpected financial setbacks without incurring more debt.
“Almost one year into the coronavirus crisis, the financial confidence of Canadians has reached a low point,” said Grant Bazian, president of accounting firm MNP LLP. “The virus has understandably created significantly more financial anxiety for those directly impacted by job loss, declining wages, and business closures. The index shows that financial pressure is mounting for a large proportion of the country.”
The index revealed that 43% of Canadians fear they can’t cover their living expenses for the next year without taking on greater debt. Another 42% are concerned about their current debt level, and 45% regret the amount of debt they have taken on during the pandemic.
“When we see so many Canadians feeling like they can’t afford living expenses without taking on more debt, it signals that more financial upheaval may be on the horizon – particularly with so much uncertainty still ahead,” said Bazian.
Less than 30% of respondents are confident they can cope with life-changing events without taking on more debt, and only 25% believe they could stay above water if they lost their job or there was a change in their regular wages.
According to the survey, 28% of Canadians have taken on more debt due the pandemic, which includes the use of credit cards, lines of credit, borrowing from friends and family, and taking out various loans.
Ipsos surveyed a sample of 2,000 Canadians for MNP between Dec. 1 and Dec. 3, and weighted the results to reflect census data.
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