Personal finances continue to be major source of stress for Canadians: MNP report

Personal finances continue to be a major source of stress for Canadians and half anticipate that the situation will continue to deteriorate, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos.

Grant Bazian

“Facing inflation as well as sharply higher interest rates on their outstanding debts, deeply indebted Canadians may be rightfully feeling that the worst is yet to come,” said Grant Bazian, president of MNP LTD., the country’s largest insolvency firm. “There isn’t much financial wiggle-room in many household budgets, illustrating the toll of higher interest rates, especially for those who can least afford it.

“The results reveal a more positive financial outlook among Canadians, although confidence remains lower than levels recorded in 2021 and earlier: a reflection of the lingering concerns many have surrounding inflation and interest rates. For lower-income Canadians many cannot find a financial comfort zone.

“Whether expecting the worst or hoping for the best, Canadians should be proactive about managing their debt. Keep a close eye on your budget, and build your emergency fund for any unexpected expenses, whether that be a car repair or an increase in debt servicing costs. If you receive a tax return this year, put it aside for a rainy day or use it to pay down debt . . . Many are hesitant to reach out for help due to the stigma of bankruptcy, which only prolongs the financial stress and can lead to more serious problems like wage garnishments and harassment by collection agencies.”

Some of the report’s key findings include:

• When asked about the impact of the current economic conditions in Canada on their personal finances, 50 per cent say they believe that the worst is yet to come, while 35 per centfeel that we are currently experiencing the worst part of the economic cycle. Fewer are optimistic about the future with only 15 per cent stating that the worst is behind us;
• 33 per cent of Canadians feel that the economic conditions over the last six months were worse than they expected.  46 per cent (+1pt) of Canadians report that they are $200 away or less from not being able to meet all of their financial obligations, including 30 per cent (unchanged) who say they already don’t make enough to cover their bills and debt payments;
• While the number of insolvent Canadians remains consistent, the average amount of money households have left over at the end of the month has dropped slightly to $787, down $64 from the previous quarter. 57 per cent ( 2pts) of Canadians still say that if interest rates go up much more, they will be in financial trouble. 61 per cent, (-1pt) agree they are concerned about the impact of rising interest rates on their financial situation.

(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)