Paycheck to paycheck: Do Canadians have enough money to live on and what should they do if not?
Poll shows how Canadians are living and surviving during a pandemic.
A new survey by accounting and consulting firm MNP Ltd. shows that many Canadians are struggling financially during the pandemic. 53% of those surveyed said that after all bills and loan payments, they have $200 CAD or even less left — an anti-record in the past 5 years. 30% of those who have less than $200 CAD left to live on said they have no money at all at the end of the month.
The support measures provided by the state because of COVID-19 have largely been temporary, and residents are still drowning in debt.
"It scares Canadians that they have to make ends meet, and some don't make it either. It can end up being a huge amount of late payments and delinquent loans," says Grant Bazian, president of MNP.
During the pandemic, some families tried to save money, and they succeeded. But there are also those who, conversely, took on more debt because of job losses, pay cuts or in an effort to save their businesses. According to MNP, 25% of Canadians increased their debts during the pandemic. 20% of those surveyed paid bills out of personal savings, 14% used credit cards, 7% took out a loan and 3% resorted to deferred payments.
"Those who have taken on more debt have become more vulnerable to higher interest rates in the future. When rates rise, people may not be able to repay their loans," Bazian wrote in the report.
Interest rates are something to look out for when deciding to take out another loan. Bazian noted that 6 in 10 Canadians surveyed said lower rates are an excuse to buy things they wouldn't otherwise afford. But it's naive to think rates will never go up.
"You have to stop spending money if you can't afford it," says Bazian.
So what should those for whom the pandemic has become a source of financial problems do? Bazian believes that the best solution is to stop: stop burdening yourself with new debts, reduce your spending and think about how to get out of debt. A financial advisor or bankruptcy trustee, for example, can help. Options include strict cost control, refinancing loans, selling expensive assets or declaring bankruptcy.
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