National survey reveals how continuing financial shortfalls prompt consumers to consider tradeoffs and sacrifices
While the latest economic snapshot from Statistics Canada showed an increase in household wealth, that came on the back of a rise in stock and property markets. That leaves a large swath of the population with a substantial liquidity problem – and, as a new survey shows, a long road to walk toward resolving their debts.
In a poll of Canadian consumers conducted by TransUnion on November 30, 50% said their household has sustained a negative impact from the COVID-19 pandemic. Among those who said they weren’t impacted, 53% said they don’t expect to be in the future. Half of the households surveyed said their income was still negatively impacted by COVID-19, with Gen-Z respondents reporting the greatest impact (67%). Of those who said they weren’t impacted, just 17% felt they might be in the future.
Nearly two thirds of impacted respondents said they can continue to pay their bills and loans for at least a month longer, though 39% said their household finances were in worse shape than they’d planned. Many are struggling to make ends meet, with respondents saying they would be short on by an average of $875 a month.
When asked which bills and loans they were most concerned about paying, 51% of all respondents cited credit-card debt; that number decreased to 37% among Gen-Z respondents. Other ongoing obligations identified by respondents included mobile phone bills (cited by 30% of all respondents), utilities (27% overall), internet (26%), rent (25%), mortgage payments (22%), and insurance (21%).
As for the loans or bills that they enrolled in financial accommodation programs, 35% of respondents indicated business loans; 15% asked for relief on student loans; and one tenth said they asked for accommodation on mortgages (11%), auto leases (10%); and personal loans (10%).
Among the current tactics used by everyday Canadians to help meet their outstanding and ongoing obligations, 60% said they’ve had to cut back on discretionary expenses in their household budget; 30% said they are saving less for retirement; and 28% said they’ve cancelled subscriptions or memberships.
Moving forward, one third (32%) said they’d make partial payments on their debts. Nearly three tenths (28%) said they’d withdraw from their savings and investments, a strategy that showed outsized adoption among older generations. Almost the same percentage (27%) said they’d borrow from family and friends, with Gen Z and Millennial respondents being more likely to say they’d do so. Concerningly, 15% said they don’t know they will make their payments.
Over half (53%) of Canadian consumers said they’d put off going on vacation. Respondents also cited delaying other major purchases such as home improvements (23%), auto purchases (18%), and home purchases (12%).
