Cost-of-living, burnout, debt, restrictions creating perfect storm in Canada

As we enter year three of the pandemic, Canadians are overwhelmed and fatigued by the numerous economic and life challenges being thrown their way, with everything from cost-of-living, burnout and COVID restrictions mounting—and most of all debt. Canada’s national debt hovers around $1.2-trillion. That’s $31,000 per Canadian. Much like our governments, Canadian households are also awash in debt. Statistics Canada says household credit market debt as a proportion of household disposable income, rose to 177.2 per cent in the third quarter of 2021. This means $1.77 in consumer debt for every dollar of household disposable income. A new national survey by Licensed Insolvency Trustees, Bromwich+Smith, conducted by Angus Reid puts a lens on financial hardships throughout the pandemic, the conversation around work, money, and the delicate balance of health. Overall, 84 per cent of Canadians are worried about inflation and the cost-of-living. And there’s good reason. Statistics Canada said the Consumer Price Index rose 4.7 per cent year over year in its December report. Canada is facing higher prices for gasoline (+43.6 per cent), furniture (+8.7 per cent) and food (+4.4 per cent). Meanwhile, seven-in-10 Canadians are worried about their physical and mental health. This includes contracting COVID, general burnout and sleep deprivation. Additionally, two thirds are concerned about COVID restrictions, which vary province by province. Financially, Canadians’ stressors include being able to save money (a concern of two thirds of the population), managing day-to-day household expenses (54 per cent) and managing debt (47 per cent). Overall, nearly half of Canadians (48 per cent) are more stressed to start 2022 than they were during the first lockdowns in 2020, especially as it pertains to their finances. The results of the survey are expected given the perfect storm of economic and societal factors we face; but it is especially troubling when viewed through the prism of groups more vulnerable to economic shocks, such as younger adults. Several economic situations are set to effect people in 2022, including spikes in rents and grocery prices and expected increases in payroll taxes. Canadians were asked to answer how some of these possible economic situations would impact them. At the top of the list of negative impacts was the planned rise in payroll taxes (due to rising Canada Pension Plan and Employment Insurance payments). This was followed by a repayment of personal debts, changes or reductions in government supports, a reduction in hours/pay at work and the likelihood of rising rents in Canadian cities. Despite the economic setbacks, it's a key opportunity for people to re-evaluate their relationship with money. I can’t imagine a bigger need for financial relief than living through this global event. When in debt, it’s normal to feel a range of emotions. Debt takes a toll on more than just your finances. It steals confidence, time, happiness, and ultimately, self-worth. There are fundamental things people can do to ease financial burdens. Here are some tips to help Canadians keep afloat. First off, people must recognize they are not alone and there are solutions out there. Speaking to creditors about a personal situation is a good start. Try to discuss money between family, spouses, and partners and review finances—agree as a family on how to manage the situation. Some easy changes can reduce monthly bills, such as eliminating streaming services not in use, cable etc. Also, avoid food delivery services. Since many are likely staying home, why not cook dinner instead? Make a family activity of it. Some things to remember when managing debt or finances include avoiding cashing in investments or RRSPs; don’t borrow from one credit card to pay another; stay away from secondary lenders, payday loans, and get out of debt quick options. Also rent out that unused room for extra income and consider bartering services to reduce costs. Given the current climate, it is safe to say that a lot of people are struggling. And the one thing that is certain is uncertainty. During these times, it’s important to not make any rash decisions. Seek out help from a professional, such as a Licensed Insolvency Trustee, authorized by the federal government to help conquer debt, find relief and rebuild worth. We all possess the power to seek comfort from the storm and ask for help. Laurie Campbell is director of client financial wellness at Bromwich + Smith. The Hill Times

Cost-of-living, burnout, debt, restrictions creating perfect storm in Canada

Overall, 84 per cent of Canadians are worried about inflation and the cost-of-living. And there’s good reason.

Do countries need chief risk officers for this scary world?

Trudeau’s Liberals could become ‘political casualty’ over grim economy in next election, say politicos

Financial band aids are nice, but cures are better

Do countries need chief risk officers for this scary world?

Canada needs a modern, national health data architecture

To address online harms, Canada must commit to digital media literacy

A cure for multiple sclerosis could be just around the corner

Renewable energy is the way to go, says letter writer

Supporting local broadcasters is critical for our democracy

Could budget spending overheat the economy? Experts weigh in

‘Don’t break out the champagne’: business insolvencies dramatically down, not a sign of financial resilience, economists warn

Government must help businesses, not just households, to sustain economic recovery

The COVID-19 cohort debt professionals are expecting

Unemployment rate may be at a record low, but confidence in the future far short of a record high

News

Get free news updates

Opinion

Submit a guest opinion article

resources

Advertise

subscribe

get help

Cost-of-living, burnout, debt, restrictions creating perfect storm in Canada

Overall, 84 per cent of Canadians are worried about inflation and the cost-of-living. And there’s good reason.

Get The Weekend Point of View Newsletter