Nearly Half (48%; +2pts) of Canadians Are on the Brink of Financial Insolvency; Struggling to Make Ends Meet at Month-End

More Than 4 in 10 are unsure they will be able to cover all family and living expenses in the next year without going into further debt

The author(s)
  • Sean Simpson SVP, Canada, Public Affairs
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Toronto, ON, April 22, 2019 — A new wave of research conducted on behalf of MNP Ltd. reveals the MNP Consumer Debt Index has fallen four points since December, indicating growing concern and deteriorating financial stability among many Canadians. In fact, nearly half (48%; +2pts) of Canadians are $200 or less each month away from financial insolvency, including 26% (down 5 pts since December) who say they have zero funds leftover at month-end as they already don’t make enough to cover their bills and debt obligations. On average, after the bills have been paid, Canadians are left with a total of $699 in comparison to the $641 reported in December, although the increase in leftover wiggle room in March may be attributed to cautious spending following the holiday season.

Women (53%; +2pts) are significantly more likely than men (42%; unchanged) to be within $200 or less of financial insolvency, although levels of financial insolvency reported has remain stable for both cohorts since December. However, there is much more discrepancy of insolvency across the region, as 55% of Atlantic Canadians report being at risk, up 10 points, followed by Quebec (51%; +5pts), and Ontario (48% +2pts). The proportion of financially insolvent Albertans has remained unchanged at 48%, while fewer residents of Saskatchewan and Manitoba (46%; -10pts), and British Columbia (39%; -2pts) are likely to be within $200 or less away from financial insolvency.

The slight gain in average after-tax income is coupled with stalled concern towards personal debt. Four in ten (39%; unchanged) rate their personal debt situation as excellent, 2 in 5 give their situation a neutral rating, and 17% (unchanged) rate their person debt situation as terrible. However, in comparison to previous years, Canadians do perceive their current debt situation slightly worse. When reflecting on the past year, only a quarter (24%) of Canadians believe their current debt situation to be better, down 3 points, while nearly 2 in 10 say it has worsen, and directionally fewer (31%; down 2 pts) say their debt situation has improved when compared to 5 years ago.

Evaluating Consumer Debt

Many Canadians continue to hold out hope for the future, as a year from now, more than a third (35%; -1pt) expect their debt situation to improve, with only a minority believing it will worsen (13%), and 5 years from now, nearly half (45%) believe their situation will improve, with only 12% stating the opposite.

However, seeing improvements in debt in just five years could be out of reach, as slightly more Canadians report taking on consumer debt this March. In detail, two in three (67%) Canadians say they have taken on some consumer debt, up 2 points since this time last year. Many (41%; -2pts) have feelings of guilt for the amount of debt they have taken on in their life, and are not only concerned about their current level of debt (37%; -4pts), but are also unsure they will be able to cover all living and family expenses in the next 12 months without going into further debt (44%; -1pt).

Interest Rates Hold Steady, But an Unexpected Hike Could Cause Financial Trouble for Many

With the Bank of Canada announced that they’re likely to hold off interest-rate increases through 2020, Canadians appear more relaxed in their attitudes towards interest rates. Fewer Canadians are worried about their ability to repay debts (54%; -3pts), believe they could be in financial trouble (47%; -3pts) if rates continue to rise, or even move towards bankruptcy (35%; -4pts) if the rate climbs. On trend, less than half (46%) say they are already feeling the effects of the interest rate increase, down 5 points since December. Though similar proportions (78%; -1pt) when compared to December, do say they will be more careful with how I spend my money with interest rates rising.

However, if the Bank of Canada would decide to increase rates, many Canadians lack confidence in their financial ability to cope. Canadians are continuing to lose confidence in their current financial ability to be able to absorb an interest rate increase of 1 percentage point (down 2 points) or an additional $100 in interest payments on debt (down 3 points). Interestingly, each scenario does usually translate into the same additional payment, but when put into a dollar amount, Canadians seem to believe it will have a larger impact on their ability to pay their debts – continuing to demonstrate a knowledge gap among Canadians. Regardless of the amount of increase they would need to absorb, nearly half (47%) of Canadians say they are concerned about the impact rising interest rates can have on their financial situation.

About the Study

These are some of the findings of an Ipsos poll conducted between March 13 and March 24, on behalf of MNP LTD. For this survey, a sample of 2,070 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 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.

For more information on this news release, please contact:
Sean Simpson
Vice President, Canada, Public Affairs Ipsos
+1 416 324-2002
[email protected]

About Ipsos

Ipsos is an independent market research company controlled and managed by research professionals. Founded in France in 1975, Ipsos has grown into a worldwide research group with a strong presence in all key markets. Ipsos ranks fourth in the global research industry.
With offices in 89 countries, Ipsos delivers insightful expertise across five research specializations: brand, advertising and media; customer loyalty; marketing; public affairs research; and survey management.
Ipsos researchers assess market potential and interpret market trends. They develop and build brands. They help clients build long-term relationships with their customers. They test advertising and study audience responses to various media and they measure public opinion around the globe.
Ipsos has been listed on the Paris Stock Exchange since 1999 and generated global revenues of €1,780.5 million in 2017.

The author(s)
  • Sean Simpson SVP, Canada, Public Affairs