Rainy-day savings taking greater priority amid concerns over external factors affecting finances
Canadians are officially going on cost-cutting mode as the COVID-19 pandemic’s impact fuels concerns over personal finances, according to findings from a new survey.
In its 2020 Consumer Debt Report, the Credit Counselling Society found that a prospective rise in cost-of-living expenses was the top concern shared by 51% of Canadians it surveyed. Nearly the same number of respondents (50%) said they’re concerned about economic factors outside their control including COVID-19, downturns in the economy, or a rout in the housing market.
While the pandemic has exposed financial vulnerabilities among Canadians, most are still hesitant to ask for help. Among those surveyed, 86% said they could do better on at least one aspect of financial management or planning – such as maintaining emergency savings, saving for retirement, and making monthly bill payments – but just 17% said they need help with their finances.
Nearly a third of Canadians (31%) are having problems paying down their debt, either just making minimum payments or not keeping up at all; nearly two thirds (64%) are carrying non-mortgage debt.
From a savings perspective, just over two in five (44%) said they only have enough emergency savings to take care of one month’s expenses or less. When asked why they maintain emergency savings, the vast majority (84%) said it’s just good financial planning.
Other reasons for emergency savings cited include:
- Uncertainty surrounding unexpected events aside from COVID-19 (57%);
- Possibly falling ill and becoming unable to work (52%);
- Uncertainty due to COVID-19 (48%); and
- The possibility of becoming unemployed (33%).
With the arrival of the pandemic, Canadians have come to better appreciate the importance of financial prudence. More than half (53%) said they’re cutting back on non-essential spending because of COVID-19, and 48% are more mindful about their emergency savings.
When asked what types of financial assistance they’ve availed of during COVID-19, more respondents said they tapped into financial supports like government aid programs (27%) or personal savings (26%) compared to those who leveraged informational supports such as budgeting (20%) or using online websites, blogs, or apps (15%).
And while they may be in financial straits, the survey found indebted Canadians still hesitate to reach out for help. Far and away the most-cited reason was a feeling that they don’t need financial assistance (51%) followed by a perception that they can’t afford it (22%).
Other reasons holding those in debt back include feeling they can’t be helped (17%), nervousness about who to trust (16%), and lack of time and resources (16%).