Sky-high inflation and rising interest rates are creating financial challenges for Canadians with 24 percent reporting they could not come up with $500 in cash tomorrow without borrowing or selling something, according to a new study.
Nearly half of those surveyed (46 percent) have debt other than a mortgage. Over half (57 percent) of Canadians with non-mortgage debt have carried over a credit card balance in the last two years. Almost half of Canadians (48 percent) with non-mortgage debt say paying off what they owe is stressful.
Over a third (37 percent) of Canadians with non-mortgage debt have borrowed money to pay daily expenses and bills in the last two years, and 33 percent are not sure they understand how fluctuating interest rates will affect their debt.
Canadians also misjudge their own financial management skills, according to the report.
“Almost half (47 per cent) of Canadians grade their personal finance skills as an A or B, yet just over a quarter (27 per cent) of those giving themselves a top grade also admit to buying things they can’t afford,” said the report. “Additionally, half (51 per cent) of the same group say they worry about money,” the document said.
More than one-quarter of Canadians who said they were confident that they could stick to a budget do not actually follow one, which the CPA said is crucial during times of high inflation.
“It’s difficult to predict whether inflation will continue to rise, and it’s something we can’t control, but what we can control is our actions and the outcome of our personal finances,” said CPA representative Doretta Thompson in the release.
The CPA also advises Canadians to take an inventory of all their debt and know exactly how much is owed, so they can set up a realistic repayment plan to pay down any outstanding debt.
People might also want to track their spending and create a budget documenting their earnings, fixed expenses, and discretionary monthly spending, suggested the CPA.
The survey results are from an Ipsos survey conducted on behalf of the CPA, between June 16 and 23. A total of 2,000 adult Canadians participated in the survey.