Report shows how inflation is impacting households' ability to adapt
Canadian families are losing their ability to make the best financial decisions to adapt to current or future situations, a new report has found.
With inflation still well above the BoC’s 2% target, consumers are losing their financial flexibility and trying to cope with the ‘new normal’ of financial anxiety.
The RBC Financial Flexibility Survey, published today (Sept. 20) reveals some hard truths about Canadian household’s finances due to the cost of living:
- 87% of respondents are concerned about inflation
- 77% would like to save more but can’t because of rising costs
- 69% are concerned about interest rate hikes
- 64% are concerned about falling behind financially this year
- 48% said they have never been more stressed out about money
Two thirds of respondents said they fear being unable to pay bills if high inflation continues into 2024 and 40% say they have cut back on investing to be able to save more.
Debt is a major source of concern with 72% of those who already have debt expressing concern about taking on more.
Recession risks
Recession is also a worry with 71% believing it would be tougher to cope with it now than it was during the 2008/09 financial crisis and 70% expecting that their own finances would be impacted. However, more than half say they are too busy trying to make ends meet to worry about a recession.
Poll participants are also concerned about their retirement with 39% saying they may have to delay giving up work while 21% of current retirees think they may have to go back to work.
“When we add on that more than one-third of Canadians don’t have an emergency fund, we’re seeing financial flexibility disappearing for many across the country,” said Craig Bannon, Director, Regional Financial Planning Support, RBC. “This is why it’s so important to have a financial plan in place – one that gives you the flexibility to adjust along the way, as your needs change.”
