Half of Canadians say they are coping with higher costs of living by reducing their living expenses and taking on extra work is becoming more common, says a new survey by BDO Debt Solutions.
The survey said 56 per cent feel they need to cut back on non-essentials to cope with inflation and 30 per cent feel so overwhelmed by their debt load that they don’t know what to do about it.
“Our research in the Fall of 2022 found that affordability challenges had reached a climax, and so this year we wanted to understand how Canadians are responding to these pressures and be part of a dialogue that is more solutions-focused,” said Nancy Snedden, National Leader of the BDO Debt Solutions practice. “Inflation has made tackling debt even harder, and people are demonstrating the need to take a coordinated approach that combines budgeting, debt management, and – when possible – diversifying their revenue streams.
“Reducing your debt burden is one of the best ways to help cope with the affordability crisis,” adds Snedden. “But there’s a hitch, most people are unfamiliar with debt management strategies. Debt is still a taboo subject and is often not talked about with friends and family. It’s why we strongly encourage people to look into their debt relief options. Many households have already cut back as much as they can, and not everyone has the time or capacity to take on extra work. A Licensed Insolvency Trustee can be a trusted first point of contact to explore debt relief and provide personalized solutions that work with all budgets.”
The report also found:
- 37 per cent plan on reducing their debt in the upcoming year by adopting better budgeting habits—this number increases to almost half (47 per cent) of respondents aged 18-34;
- Cutting back on expenses is the leading strategy for coping with inflation, but a strong majority of lower-income households (under $40k) are reducing not only non-essentials (67 per cent), but also some essentials like food, clothing, and utilities (58 per cent);
- When it comes to diversifying revenue streams, the idea of taking on extra work, either through a side hustle or gig work, is becoming increasingly common as a way of weathering the affordability crisis and paying down debt. 31 per cent acknowledge they would take on extra work to have more financial independence, pay for essentials (26 per cent) and pay down debt (26 per cent). About a quarter (24 per cent) of Canadians aged 18-34 have already added to their revenue streams through part-time work to cope with inflation;
- 29 per cent are not at all familiar with debt consolidation loans or debt management plans (32 per cent). And half of respondents (51 per cent) are not at all familiar with a consumer proposal—a debt reduction strategy that is more popular than bankruptcies and has no impact on a person’s assets.
(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)
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