Understanding the Consumer Debt Report: An In-Depth Analysis
The Consumer Debt Report provides a comprehensive overview of how Canadians perceive their personal finances. This analysis, based on the 2023 report, aims to shed light on the current financial situation of Canadians, their views on debt, savings, perceptions of financial assistance, and more.
Canadians’ Perception of Personal Finances
Diverse Viewpoints on Personal Finances
Canadians are divided regarding their financial health. Some are anxious about their personal finances, while others are confident. The COVID-19 pandemic has intensified this divide, causing financial conditions to either improve or deteriorate for different segments of the population.
Anxiety vs Confidence
Approximately one-third of Canadians feel anxious about their financial situation, particularly those with lower incomes or who have experienced employment changes due to the pandemic. On the other hand, around 47% feel confident about their current financial situation. Those most likely to feel confident are:
- Males.
- Individuals aged 55 and above.
- Higher income earners (>$50K).
- Individuals without non-mortgage debt.
Pandemic’s Impact on Finances
Three-in-ten Canadians believe their finances have worsened since the pandemic, while the same proportion think they are better off. Those hardest hit tend to have lower incomes and have experienced disruptions in employment due to the pandemic.
Factors Affecting Financial Situation
Reduced luxury spending and increased income were the top contributors to improved finances during the pandemic. On the other hand, increased spending on essentials and employment instability were the main contributors to worsened financial conditions.
Addressing Financial Concerns
The increasing cost of essentials is the most significant financial concern for Canadians, particularly among younger Canadians. Other worries include inadequate emergency funds and insufficient retirement savings.
Attitude towards Personal Finances in 2023
As we head into 2024, around 28% of Canadians feel pessimistic about their finances, mostly lower earners and those burdened with debts. Meanwhile, four-in-ten are feeling optimistic, primarily higher earners with no debts.
“The need for emergency savings was the top financial lesson learned during the pandemic.”
Debt and Savings
Majority of Canadians carry non-mortgage debt, leading to feelings of concern, worry, or anxiety. Despite this, most debt-holders are managing their debt, with only one-in-ten unable to keep up with payments.
When faced with financial strain, Canadians are equally likely to rely on credit or their personal savings. The most common financial supports utilized during the pandemic were credit cards and personal savings.
Perceptions of Financial Assistance
Many Canadians believe there is a stigma associated with seeking financial assistance. They are more likely to feel embarrassed or out of options than responsible or proactive. However, over half of Canadians would likely seek financial assistance when their monthly debt obligations reach $2000.
“Canadians show high levels of concern and understanding when friends or family are struggling with their finances, but tend to be more worried about what others will think if they needed to reach out.”
Comfort Levels Discussing Personal Finances
When it comes to finances, Canadians feel most comfortable discussing their long-term financial plans and least comfortable discussing their debt levels. Canadians’ comfort levels in discussing personal finances are a clear reflection of their attitudes towards debt and savings.
