CALGARY, ALBERTA--(Marketwired - May 8, 2017) -
Editors Note: There is an infographic associated with this release.
The latest MNP Consumer Debt Sentiment Survey shows that a lack of financial literacy skills may be intensifying Canadians' consumer debt binge.
Six in ten Canadians say that they are less than very confident in their understanding of the impact of interest rates on debt payments. The same number indicated that they are less than very confident about their ability to set and follow a budget. When it comes to saving, two in three said that they are less than very confident in their ability to create a rainy-day or emergency fund.
"The most alarming thing about the record consumer debt levels in Canada is the lack of basic financial literacy skills to manage the debt," says Grant Bazian, President at MNP LTD, a division of MNP LLP.
The survey showed that over half of Canadians are now $200 or less per month away from not being able to meet all of their bills or debt obligations each month, including 31 per cent who say they already don't make enough money to cover them. The proportion of Canadians who are now living within $200 a month of being unable to pay their bills is down 4 points since September 2016, but up 6 points compared to February 2016.
"With such a small amount of wiggle room, any kind of unanticipated hardship, such as a job loss or even a car repair, could send an already struggling family into financial despair. If you're in this situation and you don't have any savings and you don't understand how interest rates impact payments, you take on more debt and even high-cost loans. That's how so many end up in an endless cycle of debt," says Bazian who runs a national team of licenced insolvency trustees in over 200 offices across the country.
A majority of Canadians say that when it comes to their personal debts, they would go back and do things differently if they could. Nearly half say they are concerned about how much debt they have. About the same amount expressed regret for the amount of debt they've taken on in their life, while nearly four in ten regret the debt they've taken on in the past year alone. Concern and regret were significantly higher among those who aren't confident about their understanding of financial concepts like credit scores, the impact of interest rates on debt payments, bankruptcy or insolvency.
Despite the anxiety around debt and the lack of skills to manage it, the vast majority of Canadians have not sought out professional help.
"Debt denial is a big problem. Many feel they can handle it on their own, or they don't know where to turn, or they are too embarrassed to get help," says Bazian.
Canadians with a confident understanding of finances were significantly more likely to have reduced their debt load over the past twelve months, compared to those who aren't as confident about finances.
"If you are using credit to pay for basic expenses or to service other debts, it's a sign you need help right away," advises Bazian adding that it is important to seek advice from reputable sources.
Licensed Insolvency Trustees are the only debt professionals licenced by the federal government and legally authorized to provide services under the Bankruptcy and Insolvency Act.
Key poll highlights include:
- Over half (52%) of Canadians are just $200 or less away from financial insolvency at the end of the month (down 4 points from September).
- Three in ten (31%) say they already don't make enough money to cover their bills (down 2 points since September 2016, but up 3 points compared to February 2016).
- One in ten Canadians (10%) are left with just $100 or less at the end of the month (down 3 points from September).
- Nearly half (48%) agree they're concerned about how much debt they currently have, down 4 points from September 2016. Those who aren't confident about their understanding of financial concepts (like credit scores, the impact of interest rates on debt payments, bankruptcy or insolvency) are significantly more likely to be concerned about their current debt (61%).
- Half (49%) agree they regret how much debt they've taken on in their life (down 1 point), while nearly four in ten (37%) regret the debt they've taken on in the past year alone. Those with a less confident grasp of financial matters are particularly likely to regret the debts they've accrued over the past year (46%) compared to those who have a stronger understanding (35%).
- A majority of Canadians (58%) agree that when it comes to their personal debts, they'd go back and do things differently if they could. Canadians who aren't particularly confident about their financial knowledge (67%) are more likely to want to go back and do things differently.
- The vast majority of Canadians are not very confident in their financial planning abilities.
For example:
- 55% are less than 'very confident' in their ability to pay down debt.
- 60% are less than very confident in their ability to set and follow a budget.
- 61% are less than very confident in their understanding of the impact of interest rates on debt payments.
- 66% are less than very confident about their ability to create a rainy-day or emergency fund.
- 70% are less than very confident about their understanding of credit scores, and what their own score is.
- 71% are less than very confident about their understanding of the concepts of bankruptcy and insolvency.
About MNP LTD
MNP LTD, a division of MNP LLP, is one of the largest personal insolvency practices in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working collaboratively with individuals to help them recover from times of financial distress and regain control of their finances. With more than 200 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit www.MNPdebt.ca to learn more.
About the MNP Consumer Debt Sentiment Survey
Now in its third wave of tracking, the MNP Consumer Debt Sentiment Survey is a semi-annual poll designed to track Canadians' feelings about their debt and their perception of their ability to meet their monthly payment obligations.
The survey was conducted by Ipsos on behalf of MNP Debt between March 27 and March 30, 2017. For this survey, a sample of 1,500 Canadians from Ipsos' online panel was interviewed online. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within +/ - 2.9 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
To view the infographic associated with this press release, please visit the following link: http://www.marketwire.com/library/20170506-mnpltd.jpg .
