The fourth-annual BDO Affordability Index finds debt incurred due to the pandemic is weighing on the confidence of Ontarians.
It examines how affordable life is in Canada, shows that 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. To make matters worse, many don’t know how they are going to improve their situation.
Among the key findings of the survey, 43 per cent of Canadians who carry debt added to their debt due to the pandemic, up four per cent compared to last year. One-quarter (26%) of Canadians incurred at least one new type of debt during the pandemic. Seven-in-10 (70%) say this new debt has made their standard of living worse, and only half (51%) of this group feel confident that they will be able to restore their standard of living to pre-pandemic levels.
Spending on essentials, job loss and reduced income is also taking a larger toll on Canadians’ savings this year, as compared to last year. Of the 42 per cent of Canadians saving less or not at all during the pandemic, more than half (57%) said it was due to an increase in spending on essentials such as groceries and housing, an increase of 13 per cent from last year. Half (51%) said it was because of reduced income or job loss.
“This year’s BDO Affordability Index underscores the affordability challenges faced by Canadian families more than a year into the pandemic – and it’s clear many are feeling the combined pressure of rising costs of living and the ongoing impact of COVID-19,” says Nancy Snedden, National Leader of the BDO Debt Solutions practice. “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.”
Canadians are also experiencing more difficulties affording necessities, compared to earlier in the pandemic. Close to one-quarter (23%) of Canadians find it challenging to put food on the table for themselves and their families, up four per cent from last year. Three-in-10 (31%) indicate paying for utilities is a challenge (up three per cent), and 35 per cent say the same about transportation and clothing costs.
During the pandemic, those who relied on government benefits did so heavily. Three-in-ten Canadians (29%) accessed government benefits and more than three-quarters (76%) of these Canadians describe the benefits as ‘very important’ or ‘essential’. Of that group, women (82%), Canadians ages 35-54 (84%) and Canadians making less than $50,000 (80%) were more likely to have a pronounced need for government benefits to maintain their standard of living.
In 2022, Canadians say their top priorities will be saving for emergencies, retirement and a major purchase, such as a home, car or cottage. Once again, the situation is different for the ‘haves’ compared to the ‘have-nots’, with the latter placing a higher priority on saving for emergencies, while the former will be focusing more on saving for retirement.
To read the full report, please click here.