More Canadians are staying at home amid rising prices and debt, says MNP
The challenge of balancing household budgets – especially amid high levels of debt - means many Canadians are staying at home more to save money.
In what it’s dubbed ‘inflation isolation’, insolvency experts at MNP report that more than half of Canadians polled say they are staying home more with around one third spending less time socializing with family and friends to cut costs.
But while reducing spending may be necessary amid tight budgets, the cost to respondents’ mental health is clear with 20% feeling a sense of social isolation or loneliness as a result of higher interest rates and inflation. More than four in ten say stress and anxiety has increased due to the current economic pressures.
Debt is a major source of the problem with a third saying they are paying more in monthly repayments than they were a year ago – this is most noticeable among $60K+ income households – and 43% say they are not certain they can cover all their expenses in the next 12 months without taking on more debt.
Things are worsened by a lack of understanding with many respondents to the Ipsos-conducted survey unsure of how interest rates impact their financial situation.
“Debt has a way of isolating individuals, both emotionally and socially. It can feel like an overwhelming burden that separates us from friends and family. It’s not uncommon for those burdened by debt to withdraw from social activities and relationships out of shame or fear of judgement,” said Grant Bazian, president of MNP LTD. “Understanding the intricacies of personal finance and debt management is essential for making informed financial decisions and that is another reason why getting professional advice is critical. For example, bankruptcy is not the only recourse for those who are severely indebted.
Unexpected expenses
The last thing many Canadian households need is an unexpected bill and the survey shows that this may be a step too far for those hardly coping.
Around three in ten are not confident they would be able to manage an unexpected auto repair or purchase, a change in their relationship status such as a divorce or separation, the death of an immediate family member, or paying for their own or someone else’s education.
A similar share is not confident they would be able to deal with a loss of employment or change in their wage or seasonal work or having an illness and being unable to work for three months.
Bazian stresses that doing nothing is not a good plan for those struggling with their finances, although many do just that.
“Individuals often wait years – sometimes more than five, 10 years – to seek professional help with their debt while needlessly living with the constant worry of creditors calling,” he said. “It’s important people know that they are not alone, there is help available and there is a path out of financial hardship.”
