Trying to stay instaworthy but hitting instadebt? You’re not alone.
Manulife Bank debt survey shows 38 per cent of Canadians living with debt admit it was because they lived beyond their means
One in three (33 per cent) Canadians say their spending growth outpaces their income growth.
Nearly 40 per cent of Canadians who went into debt cite doing so because they live beyond their means; 19 per cent cite not being able to break the debt habit.
Nearly half (49 per cent) of indebted Canadians 20-34 years old and a majority of those who are 35-54 years old report carrying credit cards with a balance.
One in 10 (nine per cent) admit to being clueless about how much they are spending, every month, on average.
July 25, 2019
Toronto – Are Canadians living beyond their means? According to a survey by Manulife Bank of Canada – Canadians aged 20 to 69 years old with a household income of $40,000 or more – one-third of Canadians are spending their money faster than they make it.
In an age of consumption fueled by “fear of missing out” and “you only live once” attitudes, it can be easy to dig a hole of debt. Thirty-eight per cent of Canadians living with debt admit it was because they lived beyond their means and 12 per cent directly correlate it to the result of too many costly outings with friends or family.
This pressure can leave Canadians feeling defeated year-round. In fact, 19 per cent of those with debt feel they can’t break the habit. Additionally, nearly four in ten (36 per cent) Canadians living with debt say they experience joy from seeing debt paid off. There are many ways that debt negatively impacts people, such as limiting what they can do with family and friends (22 per cent), making it impossible to spend money on entertainment (18 per cent), and negatively impacting their mental health (17 per cent) among several other things.
“Millennials are now at the age of purchasing houses and starting families, which are two areas where we are seeing expenses grow. Housing affordability remains at near-historic levels across the country and child-care costs have risen faster than inflation for Canadians,” said Rick Lunny, President and CEO, Manulife Bank. “We know we have a financial wellness crisis in Canada. Our job is to help Canadians manage debt and save money by developing nudges and tools – like our savings sweep tool – Canadians can use to achieve their goals and gain better financial health.”
Millennials are having more trouble handling their current debt situation on their own. Boomers feel less affected by debts, and more specifically, feel less likely their financial situation makes it impossible for them to spend money on entertainment, impacts their mental health, or limits what they can do with family and friends.
Those under 55 years old, women, and those with a lot of debt are among the most likely to feel stressed about the situation. What’s more: there has been a gradual yet significant decline in the proportion of Canadians with mortgages who express comfort with the payments (85 per cent, -5 pts vs. Spring 2018). In fact, there has been a sharp year-over-year decline in the proportion who claim to feel very comfortable about both the payments (28 per cent, -8 vs. Spring 2018) and the amount owing (21 per cent, -9 vs. Spring 2018) on their mortgage.
"Year-over-year, we have seen that debt carries negative mental health impacts and can leave people feeling like their financial goals are simply out of reach,” said Lunny.
When asked to rate the perceived joy they would receive from various financial achievements, two in three Canadians place escaping debt first or second overall, followed at a distance by having a sufficient nest egg for retirement.
How can Canadians reduce debt? Making adjustments to non-essential spending is a clear area of opportunity. What it looks like to individual Canadians varies by demographic. Millennials are much more willing to sacrifice dining out when compared to those over 35 years. Women are about twice as likely when compared to men (16 per cent), to say they would stop shopping for non-essential goods and services, to reduce their debts. Men and those 35 and up are most willing to give up travelling.
The results show that three in 10 say that their debt is under control and they don’t need any help to effectively control it. Others say that more effective ways to keep track of their debt and more information on ways to curb spending and reduce debts would be helpful. That is why Manulife Bank has developed intuitive tools built into its new Manulife All-In Banking Package™ to help Canadians save and manage their money better. This includes Savings Sweeps, which automatically moves excess money into your savings account each night and insights that make it easy to see spending, savings, and balances all in one place.
About the Manulife Bank of Canada Debt Survey The Manulife Bank of Canada poll surveyed 2,003 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 April 17 to April 22, 2019. 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
Established in 1993, Manulife Bank was the first federally regulated bank opened by an insurance company in Canada. It is a Schedule l federally chartered bank and a wholly-owned subsidiary of Manulife. As Canada’s first advisor-based bank, it has successfully grown to more than $22 billion in assets and serves clients across Canada.
About Manulife
Manulife Financial Corporation is a leading international financial services group that helps people make their decisions easier and lives better. We operate primarily as John Hancock in the United States and Manulife elsewhere. We provide financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and institutions. At the end of 2018, we had more than 34,000 employees, over 82,000 agents, and thousands of distribution partners, serving almost 28 million customers. As of March 31, 2019, we had over $1.1 trillion (US$849 billion) in assets under management and administration, and in the previous 12 months we made $29.4 billion in payments to our customers. Our principal operations in Asia, Canada and the United States are where we have served customers for more than 100 years. With our global headquarters in Toronto, Canada, we trade as 'MFC' on the Toronto, New York, and the Philippine stock exchanges and under '945' in Hong Kong.
