Household debt is growing so large, it may be cracking Canada’s financial foundation.
A Manulife Financial Corporation survey found that two-in-five Canadians do not expect to escape debt in their lifetime and the spending-to-income ratio is trending negatively in Canada.
The Manulife Bank Debt Survey found:
- 94 per cent of Canadians say the average household is in too much debt.
- The spending-to-income ratio is trending negatively as 45 per cent report that their spending is increasing faster than their income versus 33 per cent from the spring.
- 67 per cent of Canadians who are in debt assume everyone else is as well.
- 60 per cent of them report they have non-mortgage related debt on credit card(s) that carry a balance, a 12 per cent increase over what was observed in Spring 2019 (48 per cent).
“There is a financial wellness crisis, and it’s affecting Canadians of all demographics,” Rick Lunny, president and CEO, stated Manulife Bank in a news release.
The survey found that three-in-five baby boomers surveyed noted they are better off financially than their parents were at the same age, compared to just under half (49 per cent) for Generation X and Millennials.
Generation X age people save the least of their after-tax income, are most likely to report that spending is outpacing income, and are the most skeptical about ever being debt-free in its lifetime, according to the survey.
“Millennials are struggling too, as they have experienced the most difficulty when trying to enter the workforce (14 per cent stated they struggle a lot versus nine per cent for those aged 41-69 years old).
The new release did state, however, this group are among the most likely to indicate that their income is increasing faster than their spending (14 per cent versus 10 per cent for those 41-69 years old).
“Technology may also help them get into better shape financially than their predecessors. Three in four millennials feel it is important to have access to financial plans online, preferably through an app,” said Manulife.
“Over half of indebted Millennials who feel in control of the situation indicate that technology has helped them manage their debts compared to just one in three Generation X and Baby Boomer Canadians.”