Many Canadians Are Financially Stressed – BDO

Debt BurdenBDO Canada is part of a large global network of firms that provide debt solutions for people in financial difficulty. They publish a study called the ‘BDO Canada Affordability Index‘. Here are some of the key conclusions from the latest study:

More and more Canadians are taking on debt in all forms:

  • 57% carry a balance on their credit cards (vs 53% last year)
  • 45% have mortgage debt (vs 40% last year)
  • 40% have car loans (vs 32% last year)
  • 32% have lines of credit (vs 28% last year)
  • 18% have Home Equity Lines of Credit (HELOC’s) (vs 12% last year)
  • 15% have student loans (vs 10% last year)

Most Canadians aren’t prepared financially for retirement:

  • 40% are on track
  • 28% are not on track
  • 32% are very far behind

More and more Canadians are delaying needs & wants due to affordability:

  • Paying off the mortgage – 19% (vs 13% last year)
  • Paying off credit cards – 39% (vs 32% last year)
  • Buying essential food/healthcard products 15%
  • Paying essential utilities, hydro, phone, gas, etc. – 13%
  • Retiring when they thought they would – 17% (vs 13% last year)
  • Having children – 8%
  • Buying a car – 28% (vs 23% last year)
  • Taking a vacation – 51%, (vs 42% last year)

Basically, Canadians’ incomes are not keeping up with their needs, and so debts and financial stresses are growing. These are disturbing trends, especially since Canada (and the rest of the world) is nearing the end of the longest ever expansion and so the next recession is probably not far away.

Canadians’ growing financial stresses also suggest that there is an upper limit to the growth of real estate prices in Canada, and we may be approaching that limit sooner rather than later.