BDO Canada Affordability Index: 3-in-10 Canadians don’t have enough money for their needs

74% of Canadians have debt; 1-in-4 feel overwhelmed

 

TORONTO, October 10, 2018 – The inaugural BDO Canada Affordability Index, which examines how affordable life is in Canada, reveals that three-in-10 Canadians don’t have enough money to buy the things they need, which can lead to more reliance on debt to cover expenses. The report also finds that, among those with debt, Canadians’ average non-mortgage debt load is $19,977.

The poll of 2,000 Canadians, conducted by Ipsos for BDO Canada Limited, shows that a majority of respondents (74%) live under the burden of debt with credit cards and mortgages being the most common forms of debt. A quarter of respondents who carry debt say their personal debt is so overwhelming that they do not know what to do about it.

“It’s no surprise that Canadians are overburdened by debt, but what our Affordability Index sheds light on is how serious the affordability challenges are for so many Canadians,” says Doug Jones, president, BDO Canada’s Financial Recovery Services practice. “This lack of affordability suggests that a significant group of Canadians rely on various forms of debt to cover their spending and many find themselves feeling lost and overwhelmed by this debt. But the good news is a Licensed Insolvency Trustee can help them navigate these waters.”

Women, millennials impacted by affordability the most

As compared to men, women in Canada are more likely to struggle with affordability. Women find it more challenging to save for retirement (73% women vs 65% men), save for a major purchase (74% women vs 64% men) and afford transportation costs (43% women vs 36% men). Women are also more likely to carry heavier debt (52% women vs. 45% men).

Millennials (aged 18-34) are also significantly impacted by affordability in Canada. Nearly one-in-five (18%) say they are actively delaying having children due to affordability.

While roughly half of all Canadians admit they are not sufficiently prepared for significant life events, women and millennials report being either “poorly” or “terribly prepared” for the following:

  • Purchasing a home (56% total; women 62%, millennials 64%)
  • Dealing with unexpected costs (50% total; women 54%, millennials 54%)
  • Having children (50% total; women 51%, millennials 57%)
  • Retirement (56% total; women 61%, millennials 67%)

 Gen Xers and families also struggle

One-third (33%) of Gen Xers (aged 35-54) report having no retirement savings at all. Another 37 per cent beyond that say they have too little in retirement savings.

A potential indicator of this lack of savings is the debt load that Gen Xers are carrying. Among the 83% of Gen Xers with debt (the age group most likely to have debt), six-in-10 report carrying a credit card balance. More than one-in-three (37%) of Gen Xers have between $5,000 and $24,999 in non-mortgage debt.

“This paints a bleak picture as it seems that the majority of those in their prime are unprepared for retirement,” adds Jones. “What this can lead to is an increase in seniors who are unable to finance their final years and must rely on credit cards and other forms of debt to support their living expenses. With a strong plan to help them manage their debt, created with the advice of a professional, Gen Xers can work to bring their debt down and their savings up.”

Canadians with children are far more likely to say that their personal debt is so overwhelming that they don’t know what to do about it (34% vs. 20% of those with no kids). Across all measures (food, housing & utilities, transportation, saving for retirement, leisure and clothing), Canadian families are more likely to find it challenging to pay for these expenses than those without kids.

Many families may be financially burdened by adult children continuing to live at home. Nearly one-fifth (18%) of Canadians have a child over the age of 18 still living at home and three-quarters (76%) of those families say it is because it is too expensive for the adult child to rent.

BDO Canada Limited has 62 Licensed Insolvency Trustees (LITs) across the country to help Canadians work through their debt and find the best solution. LITs are the only professionals that are licensed by the federal government who can file consumer proposals or bankruptcies on behalf of individuals.

To read the BDO Canada Affordability Index click here.

 About the BDO Canada Affordability Index

These are some of the findings of an Ipsos poll conducted between July 3 and July 6 2018, on behalf of BDO Canada Limited. For this survey, a sample of 2,000 Canadians aged 18+ from Ipsos’ online panel was interviewed online. The poll is accurate to within ±2.1 percentage points, 19 times out of 20.

 About BDO Canada Limited’s Financial Recovery Services practice

BDO Canada Limited’s Financial Recovery Services practice is one of Canada’s oldest (operating since 1958) and largest debt help firms, with offices across the country. BDO’s advisors include Licensed Insolvency Trustees (Officers of the Court and licensed by the OSB) and Proposal Administrators providing credit counseling, consumer proposals and personal bankruptcy services.

For further information: Media inquiries please contact: Jennifer Williamson at Proof Inc., 416-969-2826, [email protected]

Licensed Insolvency Trustees Since 1958