Many Canadians are feeling worried about money. A recent survey showed that a lot of people think their finances are not good right now. Many families are concerned about their money for the next year. Let’s explore how these feelings affect people in Canada and what changes they are making.
Financial Issues
A survey from the second quarter of 2024 found that 58% of Canadians are not hopeful about their household finances in the next year. They think Canada might be in a recession or could enter one before the end of 2024. 86% of people said that inflation, or the rising prices of things, is one of their top three money worries. This is the highest percentage since the second quarter of 2022. Because of these money worries, 27% of Canadians plan to apply for new loans or change their current loans.
Almost half (46%) of Canadians say their household finances are worse than they had hoped for this year. This is a bit worse than last year. Even though 79% of people say their income has either stayed the same or gone up in the last three months, many still feel that their money isn’t enough. About 57% of Canadians feel that their income is not enough to keep up with rising prices.
Matthew Fabian, a director at a financial services research group, said, “While income levels are steady, the cost of living is still making it hard for families. Many are looking to borrow more money to help them pay their bills. With the Bank of Canada lowering interest rates for the first time in four years, we might see more people wanting new loans or changing their old loans.” Young people are especially feeling this change.
How Rising Costs Affect Households
Many Canadians are feeling the pressure of rising costs. Older Canadians and those with lower or medium incomes are feeling it the most. About 66% of Generation X (people born between 1965 and 1980) and 60% of Baby Boomers (people born between 1946 and 1964) say their income isn’t enough to keep up with rising prices. Many older adults are nearing retirement and may have fixed incomes, making inflation harder for them.
As prices go up, people must make choices about where to spend their money. Basic needs like groceries and gas are often prioritized. This means there is less money to pay off credit card bills.
Changes in Saving and Debt
Even though some Canadians are only making the minimum payments on their credit cards, more people (up 4% from the last survey) said they are paying down debt faster in the last three months.
Here are some ways Canadians are changing their saving habits:
17% are saving more for emergencies.
16% are saving less for retirement.
16% are using more of their available credit.
11% are using money from their retirement savings.
10% are saving more for retirement.
Spending Concerns
Canadians are worried about how much basic goods cost. The top three concerns about rising prices are:
89% are worried about groceries.
61% are concerned about gasoline for their cars.
52% are worried about utility bills like electricity and water.
Interest Rates and Borrowing Money
About 62% of Canadians say rising interest rates affect whether they will apply for new loans in the next year. Young people are especially feeling this impact, with 77% of Generation Z (people born after 1996) and 74% of Millennials (people born between 1981 and 1996) saying interest rates matter to them.
Struggling to Pay Bills
Almost one in three Canadians (30%) say they might not be able to pay at least one bill or loan in full. This means some may need to use savings or borrow more money. Among those who can’t pay all their bills, 35% plan to pay part of what they owe.
Here are some ways people plan to pay their bills:
32% of Generation Z will use their credit cards.
23% of Generation X don’t know how they will pay their bills.
In the next three months, Canadians expect to change how they spend their money. Over 38% think they will need to pay more for bills. At the same time, over 52% say they will spend less on things they don’t need, like dining out, travel, and entertainment. In fact, 57% already cut back on these things in the last three months. A lot of people also canceled subscriptions or memberships, with 29% reducing their subscriptions and 24% cutting back on digital services.
