Atlantic Canadians’ Confidence in Personal Finances, Debt Repayment Abilities Plummets Amid Pandemic Fatigue and Uncertainty (Prince Edward Island Release)

• More than half aren’t confident they can cover their living expenses this year (56%, +12pts).
• Six in 10 report they’re $200 away or less from not being able to meet all of their financial obligations (57%, +11pts) at month-end, more than any other region in Canada.
• Less than a quarter are confident in their ability to cope with unexpected events without increasing their debt burden (21%, -7pts).
• Atlantic Canadians are the most likely (40%, +6pts) to say they’re finding it even harder to pay down debt.

CHARLOTTETOWN, PEI – January 17, 2022 – Atlantic Canadians’ confidence in their personal finances and debt repayment is noticeably shaken as uncertainty and pandemic fatigue continue to build amid the spread of the Omicron COVID-19 variant, according to the latest MNP Consumer Debt Index which is conducted quarterly by Ipsos. Far fewer (44%) Atlantic Canadians are confident they can comfortably cover their living expenses in the next year without taking on more debt — plummeting 12 points since September, making them the least confident compared to the rest of the provinces. Nearly half (48%, -2pts) say they’re concerned about their current level of debt.

The MNP Consumer Debt Index, which measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills and endure unexpected expenses, has plummeted seven points since last quarter to 88 points, the lowest reading since its inception in June 2017.

“Financial confidence is plunging as we approach the two-year point in the pandemic,” says Walter MacKinnon, a Charlottetown-based Licensed Insolvency Trustee with MNP LTD. “We generally expect financial optimism to wane as the holiday bills become due, but Atlantic Canadians are feeling more financially insecure this year. This is likely a product of Omicron’s rapid spread and resulting pandemic fatigue, in addition to rising inflation and looming interest rate increases in 2022.”

As coronavirus uncertainty continues and with so many Atlantic Canadians feeling financial anxiety, far more are uneasy when it comes to being prepared financially for unexpected expenses. Less than a quarter (21%, -7pts) are confident in their ability to cope with life-changing events without increasing their debt burden. Compared to the other provinces, Atlantic Canadians are the most likely (41%) to say they have concerns about coping with a loss of employment or change in wage or seasonal work — a jump of six points since September. Three in 10 (30%, +7pts) are not confident in their ability to cover an unexpected car repair, and four in 10 (40%, +6pts) are not confident they can cope financially with having an illness that renders them unable to work for three months. Similarly, Atlantic Canadians are less confident in their ability to handle a change in their relationship status (21%, -7pts), cope with the death of an immediate family member (17%, -1pt), or pay for either their own or someone else’s education (12%, -12pts).

“The uncertainty of more unexpected business closures, reduced working hours or job losses, and COVID-related health concerns is hanging over us as we start the new year. One of the biggest contributors to financial turmoil is unexpected expenses, so it’s concerning that so many more households are not confident they could financially cope with something like a change in wage or a car repair,” says MacKinnon.

Compared to other regions, Atlantic Canadians are by far the most likely (57%) to report they’re $200 away or less from not being able to meet all of their financial obligations at month-end — increasing a staggering 11 points from last quarter. Atlantic Canada also has the highest proportion (33%) who say they already don’t make enough to cover their bills and debt payments, an eight-point increase. Making matters worse, Atlantic Canadians are also the most likely (40%, +6pts) to say they’re finding it harder to pay down debt. A quarter (25% +3pts) say it has become much less affordable to set aside money for savings.

“We have seen financially stressed households resorting to credit to make ends meet over the course of the pandemic. Now overextended, and with the cost of living on the rise, these households may feel they have to pile on even more debt just to afford the basics,” says MacKinnon.

Compared to the same time last year, more Atlantic Canadians are engaging in what many debt professionals consider bad financial habits — such as paying only the minimum balance on their credit card (26%, +7pts) or borrowing money they can’t afford to pay back quickly (15%, +5pts). More say they were lured in by deals or special offers such as Black Friday this year (12%, +4pts). Additionally, seven in 10 (66%) Atlantic Canadians point to low interest rates as the catalyst for buying things they might otherwise not be able to afford, more than any other province and a two-point increase since last quarter.

With many Atlantic Canadians’ budgets stretched thin during the pandemic, two in 10 (17%) believe their debt situation is worse than a year ago, a striking increase of four points since September. Yet, while concerns over inflation and cost of living are now at the forefront of many Canadians’ minds, far fewer (48%, -7pts) Atlantic Canadians say they regret the amount of debt they’ve taken on. When looking five years into the future, only a small number of Atlantic Canadians appear to be apprehensive about the road ahead — with one in 10 (9%) believing their debt situation will worsen, unchanged from last quarter.

“Pandemic fatigue might be making some feel desensitized to their debt burdens and what the future holds. With holiday bills coming due and potential interest rate increases on the horizon, I urge people to look over their finances and be ready to act if they see any early warning signs of trouble,” advises MacKinnon. “Rather than taking on more debt, those who are unable to cover their bills should seek the advice of a debt professional — and they should ideally do so before they reach a tipping point.”

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

“It can feel extremely isolating to struggle with debt alone. There is often a great deal of stress and anxiety that comes from drowning in debt, calls from collection agencies or creditors, tax issues, and wage garnishments. Remember help is out there. Don’t wait until you are several payments behind. Seeking help at the first sign of distress, such as an anticipated missed payment, is a good first step,” says MacKinnon.

Atlantic 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 Bankruptcy.

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 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 national data is available by request.