More than half of Canadians are struggling to keep up with their financial obligations, while a growing number are borrowing simply to pay for everyday expenses, according to a federal briefing note that paints a troubling picture of household finances.The Financial Consumer Agency of Canada memo, released Wednesday, says financial pressures have continued to worsen since the pandemic, with many households relying on savings or debt to make ends meet."Over half of Canadians, 53%, report they struggle to keep up with financial commitments," the April 13 briefing note states. "A quarter, 26%, say they spend more than they earn."Blacklock's Reporter says the memo, prepared for an appearance before the House of Commons finance committee, found that 50% of Canadians dipped into their savings over the past year to cope with economic conditions, while 33% borrowed money to cover regular household expenses.The findings are based on responses collected through the agency's Monthly Financial Well-Being Monitor.According to the memo, 40% of Canadians reported carrying more debt than they did a year earlier."Many Canadians are under financial strain," the document concludes.The report echoes warnings from bankruptcy trustees, who told the Commons finance committee on April 23 that household debt has climbed to approximately $3.2 trillion, including more than $2 trillion in mortgage debt.Grant Bazian, president of Calgary-based insolvency firm MNP Ltd., told MPs more Canadians are relying on credit simply to get by."They are using more debt to survive," Bazian testified."Many Canadians have no margin for error.".Bazian warned that even relatively minor financial setbacks — including job loss, illness or rising interest rates — could push many households into insolvency.While inflation has eased, he said the cumulative increase in prices has permanently stretched family budgets, particularly where wages have failed to keep pace.Drawing on seven years of MNP's Consumer Debt Index surveys, Bazian said Canadians are adapting to chronic financial stress rather than recovering from it.He cited declining consumer confidence, increased reliance on credit for necessities, shrinking financial cushions, growing emotional stress and rising vulnerability among younger Canadians, lower-income households and increasingly middle-income families.Conservative MP Greg McLean asked Bazian to explain what those trends mean in practical terms."There will be a tipping point one day when some sort of shock or crisis hits them whether it's loss of job, illness, independence or divorce that will definitely have an adverse effect on their cash flow," Bazian replied.He also warned that more Canadians are turning to high-interest borrowing, including credit cards, payday-style loans and repeated home refinancing before ultimately seeking help from licensed insolvency trustees.
