An annual BDO devised report has come to the conclusion that over half of the Canadian population is living life paycheque to paycheque and are under Canadian debt. This type of lifestyle coupled with the burden of credit debt, makes the day to day life of Canadians much tougher. Whilst the present, for the Canadian population remains bleak, financial hardship is expected to remain even in the future of Canadians. BDO the accounting firm crunched the numbers and shared that more than a third of Canadians do not have retirement savings to fall on when they finally decide to leave the labour market.
Courtesy of BDO, a survey was conducted where 53 percent of Canadians, had little to no disposable income. Meaning after deductions in the form of taxes and mandatory deductions, Canadians do not have the ability to manage debts they may have incurred during their lifetime. Out of the 2000 people utilized as the testing sample for the survey, 53 percent recorded having increasing credit debt burdens, while 40 percent of the sample, owing mortgage sums as well.
Affordability and increasing debt challenges continue to weaken the financial strength of Canadians nationwide. The broader economy, however, does not exhibit a similar situation to Canadian consumers. The inflation rate has remained stable and tamed in the 2 % parameter set by the Bank of Canada, and performance in the equity market remains bullish.
Though this profitable economic activity has continued over the last few months, as of recent signs of recession have entered the minds of Canadians nationwide. Long term interest rates have decreased, whilst short term interest rates remain higher. Soaring real estate prices in major cities have also increased, regardless of legislation aiming to make a cooling effect on heating prices.
There happens to be a generational shift as well. Canadian baby-boomers, individuals who are currently 34-56, are in their prime home owning stage of their life. Meaning they have successfully rid themselves of their mortgage debts. However, millennials and the rising populations of generation X have entered an age where they are consuming and have entered the labour force. 38 percent of them however, have no arrangements for themselves in the form of retirement savings. This is obviously due to the increased financial obligations of young Canadians, and increased debt.
Canadian females especially younger females, are continuing to face hardship with Canadian Debt as well. Women are more likely to have augmented debt, because of the lack of income. The BDO study has found, that affordability issues among women have increased sharply. Cities such as Vancouver and Toronto, hosting large populations of young people boast increased rental prices, and affordability issues, forcing young people to turn to credit as their form of financing their lives. The BDO report found that a full-time employed worker in the city of Vancouver would need generate $35.43 per hour to be able to afford a reasonably-priced two-bedroom apartment. In order for an individual in Vancouver to afford a one-bedroom apartment, Vancouverite stuck on minimum wage would have to work a ridiculous 84-hour workweek.