A growing number of Canadians are turning to credit cards, loans, or friends to afford necessities like food and housing, according to new federal research.
Blacklock's Reporter says the study by the Financial Consumer Agency of Canada found that 33% of respondents had borrowed money in the past year to cover basic monthly expenses.
“This research supports the Financial Consumer Agency of Canada’s mandate in monitoring how Canadians are managing their finances and the effects on their financial well-being,” stated the Agency’s report, Data Collection For The 2024 Monthly Financial Well-Being Monitor.
The report, based on a nationwide survey of over 12,000 people, highlighted the lingering financial strain from pandemic-era inflation. Researchers noted that Canada’s inflation rate hit a 40-year high of 8.1% in June 2022, driving up the cost of necessities like food, transportation, and housing.
The financial stress is particularly acute among younger Canadians. Forty-three percent of those under 44 reported borrowing money for basic needs, and 11% of those under 35 admitted to being two or more months behind on bills.
A quarter of Canadians, or 25%, said their income does not cover their monthly expenses, and 38% described their financial situation as “a struggle” to keep up with. Meanwhile, 15% said they are falling behind on bills.
Savings have also taken a hit, with 49% of respondents reporting they’ve withdrawn significant amounts from their savings in the past year. When asked about their ability to handle an unexpected $2,000 expense, 21% said they definitely could not, and another 10% said they probably could not.
Debt levels remain high across the board, with 37% of respondents carrying credit card balances — typically at 19% interest — and 31% managing personal loans or lines of credit. Other common debts include car payments (24%), home equity lines of credit (23%), and student loans (19%).
Despite these challenges, 51% of Canadians reported maintaining a household budget. However, 5% acknowledged using payday loans, a practice often associated with high-interest rates and financial distress.
The Financial Consumer Agency of Canada commissioned the research from Ekos Research Associates at a cost of $299,911 for monthly updates. The findings were made public on December 23, 2024.