Long-term plans on hold as everyday costs swallow up household income
The cost of living has been elevated now for several years and even as inflation eases and interest rates are cut, millions of Canadians are unable to prioritize long-term financial goals.
Instead, they are being forced to focus resources on keeping their heads above water with important long-term goals being forced into a ‘great delay’ according to a new report released today (Nov. 4) by Willful.
With two months to go until year-end, 42% of respondents to the firm’s survey said they are financially worse off than they were as the year began and that means making some tough choices about financial goals.
More than seven in ten have delayed their financial to-do list, rising to more than eight in ten for parents of minor age children. Young families reported a 25.9% price hike in household expenses, compared to the 22% increase reported by the general population, and parents of all children under 18 say they need around $1000 a month extra to be able to achieve their financial to-dos.
“As the mom of two young children, I’ve experienced firsthand the rise in childcare costs, debt repayment, and housing expenses this year, and I’ve seen how the current economic climate has made it harder for families to look beyond their immediate financial needs, often pushing long-term planning to the back burner,” said Erin Bury, founder and CEO of Willful.
November is both Financial Literacy Month and Make A Will Month and the poll of 1,000 Canadians set out to discover the financial health of the nation’s households and how long-term financial goals and everyday finances are impacted by current economic conditions.
First, the good news. Around six in ten respondents indicated that they have a TSFA and a similar share have a RRSP, while 30% have non-registered savings. But almost half have made withdrawals from their savings accounts in the past 12 months simply to cover everyday costs.
Almost nine in ten poll participants are concerned about how inflation is impacting their long-term goals and 71% say that their financial vulnerability to unexpected events - such as death or an emergency – has increased.
With budgets stretched, 39% of respondents have stopped saving for the future and 42% have delayed paying down debt – but those are not the only ways that Canadians are leaving their long-term financial security at risk.
The Great Delay survey found that 59% of respondents don’t have a will – including 32% in the core working age 35-54 age group compared to 72% of over 55s – while 73% don’t have power of attorney documents, and 65% don’t have life insurance including 37% of 35-54s and 41% of over 55s, with only 6% intending to.
