The cost of living continues to challenge household budgets, MNP index reveals
Canadians continue to struggle with the cost of living and their debt burdens, with some forced to make tough choices to keep afloat.
The latest quarterly MNP Consumer Debt Index, published today (October 16), reveals an increase to 89 points in the third quarter, up four points from the previous period indicating an improvement, and shows how Canadians are changing their behaviours to stretch household budgets as far as possible.
Key to this is bill splitting to share the costs of commuting, groceries, subscriptions, childcare, and housing with around three in ten adopting these strategies including 13% who are co-habiting to save money. Three in ten respondents say they are eating less to keep costs down.
“We’re witnessing a bill-splitting boom as Canadians adapt to the high cost of living. Strategies like sharing expenses and co-living arrangements showcase not only resourcefulness but also the financial pressure many are facing,” says Grant Bazian, president of MNP LTD. “These measures reflect the harsh reality of soaring living costs, compelling Canadians to find new ways to save. It's particularly concerning that nearly three in ten report they are cutting back on food to make ends meet.”
Strategic shopping for groceries and avoiding impulse purchases are common among consumers and 44% of respondents have stopped eating out in restaurants or getting takeaways.
Younger Canadians and those in BC and Alberta are most likely to be bill splitting.
The strategies appear to be paying off with poll participants reporting they have on average $155 more left over at the end of the month, reaching $937, the largest amount of money Canadians have had after all expenses in the last five years.
Although 42% said they are $200 or less away each month from financial insolvency, this is the lowest recorded proportion since September 2018 (40%). And 31% expect their debt situation to improve when looking ahead one year from now, with 12% believing it will worsen. These stats have improved from the previous quarter.
“While cost-saving behaviours and lower interest rates have positively impacted Canadians’ perceived financial well-being, a significant minority still report being on the brink of insolvency, indicating they are struggling to make ends meet,” says Bazian. “Still, financial pressure is easing, providing individuals with more flexibility to manage their debts and invest in their future.”
Interest rates
The easing of interest rates is certainly a positive for debt-laden consumers and fewer respondents indicated that they would struggle to manage a one-point rise, but more than half still said this would be challenging.
“Although inflation has eased and interest rates have fallen, many Canadians continue to feel the heavy burden of accumulated debt. Despite some relief, the difficult truth is that for those grappling with significant debt, cost-cutting measures alone may not provide the support they need,” explains Bazian. “Seeking guidance from a Licensed Insolvency Trustee can be a vital step for those looking to regain control of their financial situation, and bankruptcy is not the only recourse.”
Canadians' Top Money-Saving Strategies For the Next 12 Months
- Bill Splitting – 27%
- Co-habitation – 14%
- Creating a Budget / Recording All Expenses – 14%
- Cancelling Subscriptions – 13%
- Stopping Eating in Restaurants or Getting Takeout – 13%
- Avoiding Impulse Purchases – 13%
- Reducing Utility Consumption – 13%
- Going Thrift Shopping – 12%
- Finding Free or Low-Cost Entertainment – 12%
- Grocery Shopping Strategically – 12%
- Negotiating Bills – 11%
- Cutting Vices – 10%
- Moving Somewhere More Affordable – 10%
- Splitting Grocery Costs / Buying in Bulk with Roommates, Friends, or Family – 9%
