As the federal government prepares to release its annual budget next week, some have taken the opportunity to also reflect on the budgets of the country’s residents. The verdict? Not so great, says a new survey released this week.
Nearly half of Canadians are within $200 of not being able to pay their bills, according to the Household Debt Survey conducted by Financial Planning Standards Council (FPSC) and Credit Canada.
One in five Canadians will also need to liquidate their assets — e.g., convert their assets to currency by cashing in their RRSPs, selling their belongings, getting a second mortgage, etc. — in order to make payments on their debts this year.
The need to liquidate was more highly reported among men (24%) than women (14%). People with children under the age of 18 were also more likely to report the need to liquidate (23%) than people without children (16%).
This isn’t deterring Canadians from borrowing more, though. The survey found that 62% expect to take on new forms of debt this year. Credit cards are the most popular option: of those expecting to take on more debt in 2019, 23% said that they anticipate either getting a new credit card or a higher balance on their existing card.
Meanwhile, 15% said that they expect to take out a new line of credit, while 13% reported that they’ll either be taking out or increasing a vehicle loan or lease. Finally, 12% said they’ll either be taking out or increasing their mortgage.
Kelley Keehn, FPSC consumer advocate, said that knowing how much you spend down to the dollar is a good way to make sure you stick to your budget.
“Many Canadians lack awareness of their spending habits and patterns,” said Keehn. “There are several ways to create awareness, such as paying only with cash for a month which accesses a different part of the brain that is associated with loss aversion.”
The Household Debt Survey is the latest report in recent months to point out that Canadians are struggling with high debt loads. In addition to growing debt, insolvency rates have shot up and homeowners are finding it harder to keep up with mortgage payments.