Survey paints grim picture of many low-income households sacrificing their futures to meet their needs today
After roughly a year and a half of living through the COVID-19 pandemic, a portion of Canada’s population have emerged in better financial shape, while others are still reeling. Notably, many lower-income families have borne the brunt of the impact, and are in danger of being further mired in economic difficulty.
That’s according to a Seymour Management Consulting Inc. study commissioned by Prosper Canada and the ABLE Financial Empowerment Network, whose findings are laid out in a newly published report titled The Financial Resilience and Financial Well-being of Canadians with Low Incomes: Insights and analysis to support the financial empowerment sector.
"This report paints a stark picture of the growing financial challenges of millions of Canadians, despite these households making every effort to stabilize financially," said Prosper Canada CEO Elizabeth Mulholland.
According to the report, the number of low-income Canadian households has increased from 4.6 million in 2018 to 6.75 million as of June 2021, bringing the percentage of low-income families in Canada to 26.1%.
Among that group, roughly two thirds reported facing barriers impeding their ability to earn money (68%), having reduced financial security due to the pandemic (68%), experiencing significant financial hardship (65%), and having problems with respect to housing affordability (68%). Another 40% said they could not pay for their essential expenses, representing a 30% increase compared to June 2020.
"Our report and Financial Resilience Index show that low-income households remain as, or more, financially vulnerable than they were pre-pandemic across many indicators, despite the many pandemic supports made available by governments and financial institutions," said Eloise Duncan, founder and CEO of Seymour Management Consulting.
To make ends meet, low-income households have been adopting many tried-and-tested positive financial behaviours such as budgeting, reducing expenses, finding new income streams, finding more affordable accommodations, and setting up emergency savings. Still, many have had to take more extreme measures that could compromise their financial health and resilience in the long term, including:
- Borrowing more to pay for everyday expenses (43%);
- Deferring mortgage payments (36%);
- Borrowing money from friends or family (35%); and
- Taking out a payday loan (7%)
"The continuing deterioration of their financial health, while that of wealthier Canadians continues to improve, means greater hardship for millions of families, more pressure on our health and social services, and greater inequality in Canada,” Mulholland said. “We need coordinated action now by governments, financial institutions and community actors to help Canadians with low-incomes to stabilize financially and begin rebuilding their financial health."
