Consumer household debt levels are at record levels, home prices are dangerously high, and many Canadians are increasingly worried, as is the Bank of Canada, about their ability to remain financially stable in the face of pending interest rate increases. What is alarming, is that many lack the basic financial literacy skills required to manage the debt levels they are currently carrying and, in many cases, the additional credit they are still able to qualify for through many financial institutions. Of equal concern is that many Canadians have little or no understanding of the true cost of credit, or what it means if interest rates change. This impaired financial literacy is held across all age demographics and is, in part, one reason Canadians are becoming increasingly unstable in their household finances.
Unfortunately, despite the media and federal government’s increased warnings about the need to address household debt levels, debt retains a sense of stigma which leaves people feeling alone and afraid to seek professional help, with often damaging results. Debt is often hidden, embarrassing, and something we try not to speak about.
The facts are:
- 21 per cent of Canadians are technically considered insolvent
- According to the Canadian Payroll Association 47% of Canadian’s are living paycheque to paycheque
- A recent Ipsos Reid poll conducted for MNP shows that nearly half of Canadians are $200 or less away from being unable to pay their bills. *1
- Another Ipsos Reid poll reports that Canada has seen the largest increase in household debt relative to income of any G7 country since 2000. *2
- Poverty impacts over 3 million Canadians. That means that 1.9 million families do not have sufficient income for housing, food and clothing.
- Statistics Canada – Canadian debt levels increased to an all-time high of 171% of disposable income
- MNP Calgary Poll – February 16, 2016
- Financial Post – January 19, 2016
- Financial Post – September 15, 2017