Mr. Rick Lunny reports
IS HOUSEHOLD DEBT CRACKING CANADA'S FINANCIAL FOUNDATION?
An overwhelming majority of Canadians agree the average household is in too much debt according to the latest findings from a Manulife Bank debt survey. Likewise, two in five indebted Canadians do not expect to escape it in their lifetime, and the incidence of Canadians with considerable non-mortgage-related debt is climbing.
Household debt becoming overwhelming
Virtually all Canadians (94 per cent) surveyed agree the average household is in too much debt. Since spring 2019, there has been a nine-point increase (55 per cent versus spring 2019 at 46 per cent) in the incidence of Canadians who report having considerable non-mortgage-related debts. Sixty per cent of them report that they have non-mortgage-related debt on credit card(s) that carry a balance, a 12-per-cent increase over what was observed in spring 2019 (48 per cent).
"There is a financial wellness crisis, and it's affecting Canadians of all demographics," said Rick Lunny, president and chief executive officer, Manulife Bank. "The good news is that there are intuitive, helpful tools out there to make people's financial decisions easier and lives better."
Spending continues to affect Canadians with the spending to income ratio trending negatively from 33 per cent in spring 2019 to 45 per cent this fall. In fact, only 12 per cent of respondents noted their income is increasing faster than their spending.
Financial outlook by generation
Are Canadians living in generation debt? Baby boomers are in much better financial shape than their Generation X and millennial counterparts, both of which are struggling. Three in five baby boomers surveyed noted they are better off financially than their parents were at the same age, compared with just under half (49 per cent) for Generation X and millennials.
Generation X, which perceives itself as being in the most debt, saves the least of its after-tax income and is most likely to report that spending is outpacing income, and is the most skeptical about ever being debt-free in its lifetime according to the survey.
Millennials are struggling too as they have experienced the most difficulty when trying to enter the work force (14 per cent stated they struggle a lot versus 9 per cent for those aged 41 to 69 years old). However, things are not entirely bleak for this group as they are among the most likely to indicate that their income is increasing faster than their spending (14 per cent versus 10 per cent for those 41 to 69 years old). Technology may also help them get into better shape financially than their predecessors. Three in four millennials feel it is important to have access to financial plans on-line, preferably through an app.
Over half of indebted millennials who feel in control of the situation indicate that technology has helped them manage their debts compared with just one in three Generation X and baby boomer Canadians.
"We know Canadians are looking for straightforward digital options to monitor and manage financial goals. That is why we built our new app experience from the ground up and centred it on what our customers need. We are dedicated to continuously developing and delivering digital, customer-centric tools -- like our Savings Sweeps, which automatically move excess money into your savings account each night -- helping Canadians save and manage their money better," said Mr. Lunny.
Relationships and finance
Approximately nine in 10 Canadians feel comfortable sharing their complete financial picture with their spouse.
While many share financial responsibilities with their partner, of the 21 per cent of people who do not combine finances and are not considering it, 41 per cent cite ideology and, more specifically, a mutual belief that financial autonomy is important (23 per cent). In addition, 9 per cent cited their partner's shopping addiction, and another 3 per cent noted their partner's addiction to drugs and/or alcohol as reason to keep finances separate.
Competing financial priorities can make it hard to manage finances while in a relationship. Should you focus on paying off debt, maxing out your retirement contributions, budgeting for a down payment on a house or saving up for that big trip abroad? Sorting out financial goals and identifying what matters most are 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 the Manulife Bank website.
About the Manulife Bank of Canada debt survey
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 on-line by Ipsos between Sept. 20 to Sept. 26, 2019. National results were weighted by gender, age, region and education. This survey has a credibility interval of plus or minus 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 Financial Corp.
Manulife Financial is a leading international financial service group that helps people make their decisions easier and lives better. With the company's global headquarters in Toronto, the company operates as Manulife across its offices in Canada, Asia and Europe, and primarily as John Hancock in the United States. It provides financial advice and insurance, as well as wealth and asset management solutions, for individuals, groups and institutions. At the end of 2018, it had more than 34,000 employees, over 82,000 agents and thousands of distribution partners, serving almost 28 million customers.
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