These trends are compounding the financial impact of steadily rising costs of living
Despite the implementation of payment deferral programs and federal financial aid, Canadians have seen their savings eaten up by loans, essentials, and income losses/reductions over the past year, according to the latest market report by BDO Debt Solutions.
“The COVID-19 pandemic is eroding the standard of living for many Canadians, while the rising cost of living has only added to their burden,” BDO said. “To make matters worse, many don’t know how they are going to improve their situation.”
Twenty-nine percent of Canadians have accessed government benefits, with 76% of these describing the financial aid as “very important” or “essential.” Nearly two-thirds (65%) said that they might not be able to maintain their current standards of living once they stop receiving these benefits, according to BDO.
The proportion of indebted Canadians with increasing debt loads amounted 11%. The share of Canadians who added to their debt this year went up by 4% annually to 43%, while 26% incurred at least one new type of debt during the pandemic.
Read more: Canadians’ increased savings during COVID-19 are bad news for smaller lenders
Of those who took on new debt types, 70% said that these new accountabilities have made their standards of living worse, and only 51% are optimistic that they can restore their standards of living to pre-pandemic levels.
“From increased debt loads to fewer opportunities to build their short- and long-term savings, many are not seeing a light at the end of the tunnel, which is cause for concern,” said Nancy Snedden, national leader of BDO Debt Solutions. “Rising costs of living are definitely contributing to many people’s debt challenges.”
