Canadians’ confidence in personal finances, debt repayment abilities reaches lowest level ever recorded

MNP Consumer Debt Index plummets seven points to record low amid pandemic fatigue and uncertainty

• Forty-five percent are not confident they can cover their living expenses this year (+5pts)
• Four in 10 say they’re concerned about their current level of debt (43%, +5pts)
• Fewer than three in 10 (27%) are confident in their ability to cope with unexpected events without increasing their debt burden.
• Two in 10 believe their current debt situation is worse than it was a year ago (16%, +4pts).

CALGARY, AB – January 17, 2022 – Canadians are showing record-low confidence levels when it comes to their personal finances and debt repayment abilities. Now in its nineteenth wave, the MNP Consumer Debt Index has reached the lowest point since inception, plummeting seven points since last quarter to 88 points. Conducted quarterly by Ipsos on behalf of MNP LTD, the Index tracks Canadians’ attitudes about their debt situation and their ability to meet their monthly payment obligations.

Compared to last quarter, far fewer Canadians are confident they can comfortably cover their living expenses in the next year (55%, -5pts) and far more say they are concerned about their current level of debt (43%, +5pts).

“Nearly two years into the pandemic, financial confidence among Canadians has reached a record low, with household debt becoming increasingly worrisome,” says Grant Bazian, president of MNP LTD., the country’s largest insolvency firm. “Canadians’ financial optimism typically wanes as the holiday bills become due, but Canadians are feeling even more financially insecure this year — likely as a result of the Omicron variant and resulting pandemic fatigue, along with rising inflation and the potential for interest rate increases this year.”

As coronavirus uncertainty continues, and with so many Canadians feeling financial anxiety, far more are uneasy when it comes to being prepared for unexpected expenses. Fewer than three in 10 (27%, -2pts) are confident in their ability to cope with life-changing events without increasing their debt burden. More than a quarter (26%, +5pts) are not confident in their ability to cover an unexpected car repair. One in three (33%) have concerns about coping with a loss of employment or change in wage or seasonal work, a jump of three points since September. Around the same number (32%, +4pts) are not confident they can cope financially with having an illness that renders them unable to work for three months. Similarly, Canadians are slightly less confident in their ability to handle a change in their relationship status (27%, -1pt), cope with the death of an immediate family member (22%, -3pts), or pay for either their own or someone else’s education (21%, -3pts).

“It is getting harder for Canadians to see the light at the end of the tunnel. Unexpected expenses are one of the biggest contributors to household financial turmoil — and many are starting the new year being dealt another round of unexpected business closures, reduced working hours or job loss, and COVID-related health concerns,” says Bazian.

Nearly half (46%) of Canadians report that they are $200 or less from not being able to meet all of their financial obligations at month-end, unchanged from last quarter. This includes nearly three in 10 (27%, unchanged) who say they already don’t make enough to cover their bills and debt payments. Making matters worse, three in 10 (31%, +2pts) say they’re finding it even harder to pay down debt, and two in 10 (20% +3pts) say it’s become much less affordable to set aside money for savings.

“We have seen households resorting to credit to make ends meet as their finances have been stretched thin over the course of the pandemic. With the cost of living on the rise, those households who were already overextended may feel they have to take on more debt just to afford basic necessities,” says Bazian.

Compared to the same time last year, more Canadians are engaging in what many debt professionals consider bad financial habits such as paying only the minimum balance on their credit card (21%, +3pts) or borrowing money they can’t afford to pay back quickly (11%, +1pt). More say they were lured in by deals or offers on days such as Black Friday this year (12%, +4pts). Additionally, six in 10 (59%, +1pt) Canadians point to low interest rates as the catalyst for buying things they otherwise might not be able to afford, up slightly since last quarter.

With concerns around inflation and the cost of living at the forefront of many Canadians’ minds, two in 10 (16%) believe their debt situation is worse now than a year ago — a striking increase of four points since September. Four in 10 (45%, unchanged) Canadians say they regret the amount of debt they’ve taken on. When looking five years into the future, more Canadians appear to be apprehensive about the road ahead, with one in 10 (10%) believing their debt situation will worsen, an increase of three points.

“With interest rates remaining low in 2021, Canadians took advantage to make purchases that wouldn’t normally have been within their budget. Add the pressure of holiday bills coming due and potential interest rate increases around the corner, and you can see how many Canadians are approaching a tipping point,” explains Bazian. “What separates those who experience stability and peace of mind is their ability to act when they see early warning signs of financial trouble. Rather than taking on more debt to make ends meet, those who find themselves unable to cover their bills should seek advice from a debt professional.”

Licensed Insolvency Trustees are the only federally regulated debt professionals who can offer guidance regarding all the debt-relief options available to Canadians. They provide customized, unbiased advice to help individuals make informed choices to deal with debt responsibly.

“Struggling with debt alone can feel extremely isolating, but it doesn’t have to be. By speaking with a professional, Canadians can avoid the stress and anxiety caused by spiralling debt, creditor or collection calls, wage garnishments, and tax issues. Seeking help at the first sign of trouble, even an anticipated missed payment, is the best first step back to financial stability,” says Bazian.

Canadians can obtain a free and confidential assessment of their financial situation with a Licensed Insolvency Trustee at MNP LTD. As the only government-regulated debt professionals, they provide a full range of debt-relief options, including Consumer Proposals, informal debt settlements, and Bankruptcies.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3 Minute Debt Break Podcast.

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.

Now in its nineteenth wave, the Index has plummeted seven points since last quarter to 88 points, the lowest reading ever recorded since its inception in June 2017. Visit MNPdebt.ca/CDI to learn more.

The latest data, representing the nineteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between December 1-7, 2021. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.

A summary of some of the provincial data is available by request.