COVID-19 Erodes Canadians’ Standard of Living: BDO Affordability Index

Rising cost of living is an additional burden forcing Canadians to take on more debt

TORONTO, October 18, 2021 / CNW / – The Fourth Edition BDO Affordability Index from BDO Debt Solutions, which examines how affordable living is in Canada, shows that the COVID-19 pandemic is eroding the standard of living of many Canadians, while the rising cost of living has only added to their burden. To make matters worse, many do not know how they are going to improve their situation.

Among the main findings of the survey, 43% of indebted Canadians added to their debt because of the pandemic, up 4% from last year. A quarter (26%) of Canadians incurred at least one new type of debt during the pandemic. Seven in ten (70%) say that this new debt has worsened their standard of living, and only half (51%) of this group is convinced that they will be able to restore their standard of living to their previous level. the pandemic.

Spending on basic necessities, job losses and declining incomes are also weighing more on the savings of Canadians this year, compared to last year. Of the 42 percent of Canadians saving less or not at all during the pandemic, more than half (57%) said it was due to an increase in spending on essentials such as groceries and housing, an increase in by 13 percent over last year. . Half (51%) said it was because of a drop in income or job loss.

The fourth annual survey of over 2,000 Canadians was conducted in early September by the Angus Reid Group in partnership with BDO Debt Solutions. He continues to paint a picture of two different Canadas, with the financial situation of the “have-nots” (mainly women, 35-54 year olds and Atlantic Canadians) becoming even more serious, while the “haves” (mainly the less fortunate). Canadians $ 100,000 or more, British Columbians and those with a university education) are getting even further ahead.

“This year’s BDO Affordability Index highlights the affordability challenges facing Canadian families more than a year after the onset of the pandemic – and it’s clear many are feeling the combined pressure of the rising cost. of life and the continued impact of COVID-19, ”said Nancy Snedden, national leader of BDO’s Debt Solutions practice. “From increasing indebtedness to decreasing opportunities to build up their savings in the short and long term, many see no light at the end of the tunnel, which is worrying.”

Canadians are taking on more debt and not saving enough

The proportion of Canadians in debt with increasing debt levels remained stable year over year at 11%. Of Canadians with increasing debt, 70 percent say the main reason is the rising cost of living. Overspending was not a major factor; in fact, overspending as a reason for the increase in debt is down 15% from last year.

“The rising cost of living certainly contributes to many people’s debt problems,” Snedden says. “And because people are often reluctant to seek help with their debts, many people are simply unaware of the range of solutions available to them. Talking to the right debt professional can make a big difference. their life.”

Of the quarter (26%) of Canadians who first incurred new types of debt during the pandemic, credit card debt is the most common. One in ten Canadians (12%) say they have a credit card with a balance for the first time.

To manage debts incurred as a result of the pandemic, two-thirds (64%) of Canadians cut non-essential spending, including entertainment and vacations, 47% reworked their budgets, and 30% sold their belongings. More than a year after the start of the pandemic, more Canadians have also sought to reduce their debt load by claiming government benefits (24%), starting a new job (18%) and getting a second job or a job. parallel (17%).

When it comes to savings, the story of two different Canadas continues, with four in ten (42%) saving less or not at all, while three in ten saving more. People most likely to report saving less or not at all since the start of the pandemic are women (45%), Canadians aged 35 to 54 (48%) and Atlantic Canadians (50%). Among Canadians who were able to save more (28%), the main reason was a decrease in non-essential expenses, such as restaurants, travel and electronics, with three-quarters (74%) of this group citing this reason for their increased savings.

Retirement and home ownership more out of reach; the standard of living is deteriorating

Canadians have difficulty saving for retirement, with 60% of Canadians not on track to retire, based on their current retirement savings. The data becomes more concerning when looking at Canadians aged 55 and over – although three-quarters (78%) of Canadians in this age group say they have retirement savings, three in 10 (30%) say that they are ‘way behind’ in retirement savings.

Canadians increasingly face affordability barriers when it comes to owning a home, with 45% of Canadians saying housing costs are a challenge – a 7% increase year over year. ‘other. The high cost of housing is forcing Canadians to postpone their dream of homeownership, with three-quarters (74%) of Canadians aged 35 to 54 who do not own a home saying it is unlikely that they buy over the next three years. Half (48%) of Canadians across all age groups who say they are unlikely to own a home in the next three years say it is because they are unable to ” save enough for a down payment.

Canadians are also finding it more difficult to obtain basic necessities, compared to the onset of the pandemic. Almost a quarter (23%) of Canadians find it difficult to get food on the table for themselves and their families, up 4% from last year. Three in ten respondents (31%) say paying for utilities is a challenge (up 3%) and 35% say the same about transportation and clothing costs.

Canadians rely heavily on government benefits

During the pandemic, those who relied on government benefits did so enormously. Three in ten Canadians (29%) have accessed government benefits and over three-quarters (76%) of these Canadians describe the benefits as “very important” or “essential”. Of this group, women (82%), Canadians aged 35 to 54 (84%) and Canadians with less than $ 50,000 (80%) were more likely to have a high need for government benefits to maintain their standard of living.

Although only four percent of Canadians continue to receive government benefits, they depend heavily on it, as two-thirds (65%) of these Canadians are not convinced that they will be able to maintain their current standard of living once they will stop receiving them.

Changing priorities for the coming year

In 2022, Canadians say their top priorities will be saving for emergencies, retirement, and a major purchase like a house, car or cottage. Again, the picture is different for the “haves” versus the “have-nots,” the latter placing a higher priority on saving for emergencies, while the former will focus more on saving for retirement.

According to the data, 60 percent of Canadians say their top priority is to save for an emergency fund or nest egg. This is a higher priority for Canadians aged 18 to 34 (64%) and those earning less than $ 50,000 (67%). Saving for retirement is a priority for 51% of Canadians, especially among Canadians aged 35 to 54 (59%) and Canadians earning over $ 100,000 (62%). Travel expenses (40%), non-essential expenses such as dining and entertainment (31%), and paying down debt incurred by the pandemic (37%) will also be top priorities for some Canadians. next year.

“With restrictions easing across the country, the temptation for Canadians to increase spending on non-essentials can be high. But as we look ahead, we continue to stress the importance of paying down debt and staying within household budgets to avoid adding new debt, adds Snedden. “We encourage anyone who may need help overcoming their debt problems to speak to a Licensed Insolvency Trustee, who will review their financial situation as a whole, explain a full range of debt relief options – from budgeting and debt consolidation strategies to consumer proposal and bankruptcy – and help them get their finances back on track to start from scratch. “

BDO Debt Solutions has more than 160 locations across Canada and over 60 Licensed Insolvency Trustees (LITs). BDO’s LADs and Debt Professionals are committed to helping Canadians take charge of their financial future and turn the page on debt. LITs are the only professionals authorized by the federal government to file consumer proposals or bankruptcies on behalf of individuals.

About the BDO Accessibility Index
In partnership with BDO Debt Solutions, Angus Reid Group conducted an online survey of September 1-7, 2021, from a representative random sample of 2,015 adult Canadians who are Angus Reid Forum members. For comparison purposes only, a probability sample of this size would give a margin of error of +/- 2.2%, 19 times out of 20. Discrepancies in or between totals are due to rounding. Full BDO Accessibility Index 2021 results are available through the contact below.

About BDO Debt Solutions
BDO Debt Solutions is one of the from Canada the oldest and largest debt relief company, helping Canadians find the right solutions to their debt problems since 1958. In offices across the country, BDO’s local teams of debt professionals include Licensed Insolvency Trustees (court officers and licensed by the OSB), proposal administrators and credit counselors who provide consumer proposals, staff bankruptcy credit counseling and services.

For more information, please visit www.solutionsdedettes.bdo.ca or follow BDO Debt Solutions on Twitter, Facebook, LinkedIn and Instagram.

About the Angus Reid Group
Angus reid is from Canada best known and respected name in opinion and market research data. Offering a variety of research solutions to businesses, brands, governments, nonprofits and more, the Angus Reid Group team connects technologies and people for powerful insights that inform your decisions. The data is collected through a suite of tools using the latest technologies. The Angus Reid Forum, a community of opinion made up of engaged residents across the country who respond to polls on topical issues that matter to all Canadians, is the first among these.

SOURCE BDO Canada Limited

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