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Debt burdening Canadians despite gains in financial health

(Special) – Ontarians are pessimistic about the economy and feel burdened by their debt. Workers in British Columbia feel burdened by their debt and fear they are not saving enough while Atlantic Canadians have high debt, are pessimistic about the economy and are not saving enough for retirement. Quebecers seem to be faring the best in terms of their financial well-being based on many economic indicators but take the longest to pay down their debt.

The above snapshot of the overall financial health of Canadians, contained in a recent survey by the Canadian Payroll Association, does not paint a very pretty picture of Canadians’ financial situation with a few exceptions.

The survey found that working Canadians generally seem to be making some minor progress toward improving their financial health, with 66 per cent reporting they are in a better financial position than they were a year ago.

Bolstered in large part by a stronger economy, confidence among working Canadians has increased recently with 39 per cent believing their local economy will improve. In the last few years there also has been a positive shift in the number of Canadian employees with total household incomes of more than $125,000 and full-time employment levels of 90 per cent.

However, along with the good financial news Canadians still seem burdened by debt and are having difficulty saving enough.

Take Ontario, for example. Forty-six per cent of Ontarians (44 per cent nationally) say it would be difficult for them to meet their financial obligations if their paycheque was delayed by even a single week. One in five working Ontarians and Canadians say they could not come up with just $2,000 a month for an emergency expense.

The debt levels among working Canadians also seems to be increasing.

Nationally, 43 per cent say it will take more than 10 years for them to pay down their debt, up from 42 per cent in 2017 and 36 per cent in 2016. Twelve per cent believe they will never be debt free.

Almost half of B.C. employees reported that they live from paycheque to paycheque. While 65 per cent in the province said they have successfully been able to save more money, 69 per cent of employees said they save 10 per cent or less of their earnings, which is well below recommended savings levels.

Forty-five per cent of B.C. employees report increases in their amount of debt over the last year, more than the national average and among the highest nationally.

“We would have hoped to see in the survey results that Canadians would do more to alleviate debt and take control of their financial situation in strong economic times,” says Peter Tzanetakis, president of the Canadian Payroll Association. “Now is the time to pay down debt, contribute to retirement savings and take control of your financial future. Many Canadians seem complacent and are still not focused on the big picture.”

A recent survey by Manulife Bank found that debt and money issues can have an impact on relationships and your mental health.

Twenty per cent of married/common law Canadians confess their significant other doesn’t know how much debt they are in, 40 per cent with debt confess their level of debt is negatively impacting their mental health and 12 per cent with debt hid a large purchase from a loved one.

“Conversations around money and debt can be one of the most difficult things couples ever discuss,” says Rick Lunny, president and CEO of Manulife Bank. “The trick is to get these issues out in the open and have an open and frank discussion about them.”

Financial professionals say people with heavy debt loads may need to fundamentally change their lifestyles, develop a financial plan, prepare a budget and stick to it.

Many financial organizations have resources for people to get help with budgeting or consult with a financial adviser. An adviser can help you get the right advice and a plan that works for you and your particular circumstances. Getting out of debt is not only good for your finances, it also can be good for your relationships and health.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Copyright 2018 Talbot Boggs

Talbot Boggs , The Canadian Press

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