The Truth About Your Debt Load and Financial ReadinessOct 15, 2018
Purchasing a first home, starting a family, retiring comfortably – these milestones are on the list of goals most Canadians would like to achieve. Unfortunately, a significant number of Canadians are finding these things harder and harder to accomplish and consumer debt has a lot to do with it.
In order to better understand what motivates Canadians to spend, what costs they find difficult to manage and the role that debt plays, Ipsos recently completed an Affordability Index survey of behalf of BDO Canada. The results show that debt is definitely taking its toll.
Approximately 40 per cent of Atlantic Canadians admit that they don’t have enough money to buy what they need. Atlantic Canadians also indicated that they have been more likely than the rest of Canadians to delay paying off their credit card debt over the past two years because they simply can’t afford it.
Debt and your financial readiness
While it’s clear that the effects of too much consumer debt (the average Canadian reported carrying $19,997) are being felt now, our survey also demonstrated that debt is also impacting Canadian’s financial readiness and their plans for the future.
According to the Affordability Index:
- 56 per cent of Canadians report being unprepared or unable to purchase a home as a result of affordability and the debt they carry
- 50 per cent of Canadians felt they were not adequately prepared for the costs involved with having children and starting a family
- 56 per cent of respondents indicated that they were not financially prepared for retirement
We found that debt not only affects future plans, it also affects more than one demographic in a very similar way. Women and millennials, for example, tended to feel the financial squeeze a little more than other Canadians. Sixty-two per cent of women say that they would need to delay buying a home because of debt compared to the 56 per cent of Canadians overall.
How to tackle debt and financial balance
While current circumstances definitely make it a challenge to deal with debt, there are ways to alleviate the financial and emotional stress. Dealing with your debt as early as possible by creating a plan to tackle it head on is one of the best methods of striking a balance between debt and affordability.
Your first step should be to do your research. Are there online resources or tools that might help make your debt easier to resolve? Have you considered speaking to a debt relief professional such as a credit counsellor or Licensed Insolvency Trustee (LIT)?
Once you’ve explored your options, the next thing to do is to focus on your budget. If you already have a budget in place, it may be time for a review. If you don’t work with a personal budget, it’s time to start! Choose a method that you know you can stick with. An online worksheet or budget calculator or money management apps like Mint and Wally can all help you stick to the plan.