Two in five indebted Canadians don’t believe they’ll achieve debt freedom in their lifetime, according to the fall Manulife Bank Debt survey released on Friday.
That sobering statistic was just one of many to come out of the online poll, which took the financial pulse of 2,001 Canadians across all provinces between the ages of 20 and 69 who had a household income of more than $40,000.
Results revealed that 94% of Canadians believe the average household is in too much debt, and that 67% of Canadians who are in debt assume that everyone else is, too.
In the spring, the same Manulife Bank survey found that 46% of Canadians reported having considerable non-mortgage-related debts. That number has now increased to 55%.
Today, 60% of Canadians report carrying a credit card balance for non-mortgage related debt — a 12% increase from spring 2019, the survey revealed.
“There is a financial wellness crisis, and it’s affecting Canadians of all demographics,” said Rick Lunny, president and CEO of Manulife Bank, in a release.
Canadians’ spending-to-income ratio (meaning the rate at which they’re spending money compared with the rate at which their earnings are increasing) is trending negatively, up from 33% in the spring to 45% this fall. According to the latest survey results, only 12% of respondents said their income is increasing faster than their spending.
Millennials and Gen Xers are faring worst of all, compared with their Boomer counterparts. Less than half of Millennials and Gen Xers say they’re better off financially than their parents were at the same age, compared with 60% of Boomers who said the same of their parents.
In fact, Gen X believes it’s the most indebted generation out there. That perception isn’t without merit, either. According to the survey, Gen X saves the least of its after-tax income and is the most skeptical about ever being debt-free.
That’s not to say Millennials are in great shape, though. They’re facing the most difficulty in trying to enter the workforce, with 14% saying they struggle a lot. But technology might be helping them get their finances in order in ways it hasn’t helped generations before them.
According to the survey, more than half of indebted millennials say that technology has helped them feel more in control of their financial situation and manage their debts. Three in four millennials believe it’s important to have access to digital finance tools, such as the means to create and manage a financial plan through an app, compared with only one in three Gen X and Boomers expressing the same sentiment.