MNP index climbs to 91, but nearly half sit $200 from missing a bill
Three in five Canadians have already earmarked at least half of their income for bills, debt payments and regular expenses before their next paycheque lands.
The latest MNP Consumer Debt Index survey, conducted by Ipsos, found that 32 percent of respondents say most of their pay is already spoken for, while 16 percent say all of it is committed or that their expenses exceed the coming payment.
“Many Canadians are not just living paycheque-to-paycheque, they are entering each pay period with much of that paycheque already spoken for,” said Grant Bazian, president of MNP Ltd.
He said the pattern can create “a rolling shortfall, where each paycheque is used to catch up from the last one,” leaving households exposed when costs rise, income shifts or debt payments grow harder to manage.
The index climbed four points to 91, a level MNP said signals modest improvement in sentiment even though it remains below historical norms.
That reading sits alongside continued strain: 46 percent of Canadians say they are $200 or less away from being unable to cover their monthly bills and debt obligations, up three points from the previous quarter, and 28 percent say they do not earn enough to meet those payments at all.
Financial pressure is also reshaping discretionary spending.
More than half of respondents (57 percent) say they are cutting back on travel and experiences, according to the survey, including 42 percent trimming vacation plans and 40 percent scaling back on concerts, festivals, sports and other events.
A similar share (56 percent) are reducing dining and socializing, led by 48 percent spending less on restaurants, takeout and coffee shops.
Nearly a quarter (23 percent) have cancelled or avoided plans outright, and 9 percent are using credit or borrowed funds to maintain them.
Younger Canadians reported cutting back more often than those over 55 across every category, the survey showed.
“Canadians are not just tightening their budgets. Many are shrinking parts of their lifestyle to keep up with the cost of essentials,” Bazian said.
Rate sensitivity remains a live concern.
Although the Bank of Canada has held its key rate steady this year, only 21 percent of Canadians say they could absorb an extra $130 in monthly interest payments, while 35 percent say they could not, as per the index.
The share needing rates to fall rose one point to 62 percent, and 53 percent remain worried about financial trouble if rates climb.
“Stable interest rates may offer some predictability, but they don’t necessarily create relief when other financial pressures remain unpredictable,” according to Bazian.
Longer-range outlooks showed some improvement.
Three in 10 respondents expect their debt situation to improve over the next year, unchanged from last quarter, while 40 percent anticipate improvement over five years, up three points.
