Canadian households are struggling to make ends meet, as more of us teeter on the edge of financial collapse.
According to a new survey conducted by Ipsos Reid for MNP, Canadians said they are left with an average of $557 dollars at the end of the month after the bills have been taken care of and debt paid down. That’s $142 less than in June, and the least since tracking began in 2016.
Nearly half (48 per cent) said they have $200 leftover, 29 per cent of whom said they don’t have enough to cover their bills and debt. Each measure is up 4 percentage points since June.
“We’re seeing less and less wiggle room in household budgets. Many Canadians don’t have enough to cover all their expenses let alone put anything away for rainy day savings,” says Grant Bazian, MNP president, in a release.
“The reason this is alarming is because it is often unexpected expenses that force people to take on more debt they can’t afford and that begins a cycle of increasing servicing costs, and eventual default.”
The survey also found 7 in 10 people aren’t confident in their ability to handle surprises like a divorce, job loss, or even auto repairs. Nearly half (47 per cent) don’t think they’ll be able to cover living expenses for the next 12 months without taking on more debt.
There are some exercises to help stay out of trouble. Kelley Keehn, personal finance educator and FP Canada Consumer Advocate, recommends a 30-day anti-budget. She asks her readers (and husband) to account for every dollar spent in a 30-day period, without doing anything else differently. She says awareness kicks in by the end of the week and people effortlessly cut back.
“It seems many have resigned themselves to owing money for life. Interest rates may remain stable for now but that is cold comfort to those already having a difficult time making their debt payments at the current rate,” said Bazian.
Keehn says the survey highlights two key issues.
“Having an emergency account [as a buffer which greatly reduces your stress] and, having a pro like a Certified Financial Planner that can help you find money you might be leaving on the table in the form of tax credits, grants and government supports,” Keehn told Yahoo Finance Canada.
“When it comes to funding your emergency account, pros suggest that you have 3-6 months liquid savings – this should be much higher if you’re working in the gig economy or have a specialized job or work in a precarious industry, like Calgary Oil and Gas.”
Despite the anxiety, 27 per cent said their debt situation is better than it was a year ago, and 35 per cent said it’s better than 5 years ago.
Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.