Manulife Bank’s Debt Survey reveals COVID-19 pandemic has negatively impacted financial goals and overall well-being of Canadians
- One-third of Canadians were financially unprepared for the pandemic.
- Two-thirds who do not own a home worry about saving for one.
- More than three-quarters say their mental health has been impacted by COVID-19.
November 25, 2020
TORONTO – Many Canadians polled during the COVID-19 pandemic say their mental health and financial well-being have been negatively impacted, and dreams of home ownership are slipping out of reach, according to Manulife Bank’s latest Debt Survey.
More than a third of respondents (36 per cent) said they worry significantly about saving for a home, suggesting that many are getting priced out or on the verge of getting priced out of the market. Many Canadians are also concerned about supporting their children through post-secondary education (28 per cent) or saving for retirement (28 per cent).
On average, Canadians have been allocating nearly half of their income to essentials like food and housing since COVID-19 began, and 58 per cent of homeowners and 54 per cent of renters worry about making their payments.
"Debt can negatively impact mental health and leave Canadians feeling like their financial goals are unachievable. The pandemic has made that even more pronounced," said Rick Lunny, President and CEO, Manulife Bank. “It’s so important to have financial flexibility, especially when one looks at purchasing a home – it’s easy to feel stressed. Financial conversations are essential to identify opportunities, what matters most and help you stay on track, no matter the financial environment.”
A financially unprepared population
One-third (35 per cent) of Canadians admit they were financially unprepared for the pandemic. Nearly three-quarters (74 per cent) acknowledge their financial situation has been impacted as a result of the pandemic and more than two-thirds (69 per cent) within that group say the impact has been overall negative. In fact, of those respondents, 42 per cent think it may take them over a year to recover to pre-COVID-19 levels.
One-quarter of Canadians are struggling to keep up with their bills. A staggering one in six Canadians have been laid off due to COVID-19, with equally as many saying they would have been laid off had it not been for the wage subsidy provided by the government.
A tale of two realities
The survey revealed a sharp disparity in terms of how the pandemic has impacted Canadians – some have flourished, while others have been left devastated – demonstrating evidence of a K-shaped recovery narrative. On the one hand, while Canadians, on average, appear to be saving more compared to a year ago (16 per cent of after-tax income, on avg. vs. 14 per cent in Fall 2019), almost one-in-four (24 per cent; +5 pts) have been saving zero per cent of their after-tax income compared to the same period last year. Within the indebted population there has been a significant increase in the proportion of those who say everyday living is the cause of their debt (24 per cent). This suggests that more Canadians who are in debt are struggling to make ends meet, even if less Canadians (27 per cent debt-free vs. 21 per cent in Fall 2019) are now in debt overall compared to a year ago.
Younger Canadians – aged 40 or under – from lower income households, especially those who have a mortgage or are in debt, appear to have been hit the hardest financially during the pandemic. Indeed, this group tends to be more likely to report that their financial situation or debt load has been severely impacted by the pandemic, are generally having more difficulty paying their bills due to the pandemic and are less likely to have been financially prepared for it.
Mental health and finance
Survey results show the pandemic has taken a toll on the mental well-being of Canadians. Almost half (46 per cent) of indebted Canadians say debt is having a negative effect on their mental health – a 10-point increase from two years ago. In fact, indebted Canadians are far more likely to note that their debt load is causing them stress (53 per cent; +5 pts) or keeping them up at night (35 per cent; +7 pts) compared to two years ago.
“The COVID-19 pandemic is causing many Canadians to experience higher levels of anxiety and fear. Debt is amplifying that, making us feel more vulnerable to uncertainty,” said Dr. Georgia Pomaki, Leader, Mental Health Specialists at Manulife. “One way of strengthening our resilience and sense of security is to think about how we can better prepare ourselves for unforeseen expenses, which will allow us to respond more effectively to issues as they arise.”
Competing priorities can make it hard to manage your finances. Should you focus on managing cash flow for the short-term, focus on retirement contributions, or budgeting for a down payment on a house? Sorting out financial goals and identifying what matters most is a smart way to create an actionable financial plan.
Learn more about the Manulife Bank of Canada Debt Survey and ways to manage finances by visiting: www.manulifebank.ca/debtresearch
About the Manulife Bank of Canada Debt Survey
Now in its tenth year, the Manulife Bank of Canada poll surveyed 2,001 Canadians in all provinces between ages 20 and 69 with household income of more than $40,000. The survey was conducted online by Ipsos between September 20 to September 26, 2020. National results were weighted by gender, age, region and education. This survey has a credibility interval of +/- 2.5 per cent 19 times out of 20, of what the results would have been had all Canadian adults between the ages of 20 and 69 been surveyed.
About Manulife Bank
Manulife Bank is one of Canada’s original digital banks. Since our launch in 1993, we’ve been designing efficient, flexible products that fit seamlessly into our customers’ lives to help make their decisions easier and lives better. Today, Manulife Bank has over $27 billion in assets and serves clients across Canada in all provinces and territories.
Manulife Financial Corporation is a leading international financial services group that helps people make their decisions easier and lives better. With our global headquarters in Toronto, Canada, we operate as Manulife across our offices in Canada, Asia, and Europe, and primarily as John Hancock in the United States. We provide financial advice, insurance, and wealth and asset management solutions for individuals, groups and institutions. At the end of 2019, we had more than 35,000 employees, over 98,000 agents, and thousands of distribution partners, serving almost 30 million customers. As of September 30, 2020, we had $1.3 trillion (US$943 billion) in assets under management and administration, and in the previous 12 months we made $31.2 billion in payments to our customers. Our principal operations are in Asia, Canada and the United States where we have served customers for more than 155 years. We trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges and under '945' in Hong Kong.