Manulife Bank's Debt Survey reveals COVID-19
pandemic has negatively impacted financial goals and overall
well-being of Canadians
- One-third of Canadians were financially unprepared for the
pandemic.
- Two-thirds who do not own a home worry about saving for
one.
- More than three-quarters say their mental health has been
impacted by COVID-19.
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TORONTO, Nov. 25, 2020 /CNW/ - Many Canadians polled
during the COVID-19 pandemic say their mental health and financial
well-being have been negatively impacted, and dreams of home
ownership are slipping out of reach, according to Manulife Bank's
latest Debt Survey.
More than a third of respondents (36 per cent) said they worry
significantly about saving for a home, suggesting that many are
getting priced out or on the verge of getting priced out of the
market. Many Canadians are also concerned about supporting their
children through post-secondary education (28 per cent) or saving
for retirement (28 per cent).
On average, Canadians have been allocating nearly half of their
income to essentials like food and housing since COVID-19 began,
and 58 per cent of homeowners and 54 per cent of renters worry
about making their payments.
"Debt can negatively impact mental health and leave Canadians
feeling like their financial goals are unachievable. The pandemic
has made that even more pronounced," said Rick Lunny, President and CEO, Manulife Bank.
"It's so important to have financial flexibility, especially when
one looks at purchasing a home – it's easy to feel stressed.
Financial conversations are essential to identify opportunities,
what matters most and help you stay on track, no matter the
financial environment."
A financially unprepared population
One-third (35 per cent) of Canadians admit they were financially
unprepared for the pandemic. Nearly three-quarters (74 per cent)
acknowledge their financial situation has been impacted as a result
of the pandemic and more than two-thirds (69 per cent) within that
group say the impact has been overall negative. In fact, of those
respondents, 42 per cent think it may take them over a year to
recover to pre-COVID-19 levels.
One-quarter of Canadians are struggling to keep up with their
bills. A staggering one in six Canadians have been laid off due to
COVID-19, with equally as many saying they would have been laid off
had it not been for the wage subsidy provided by the
government.
A tale of two realities
The survey revealed a sharp disparity in terms of how the
pandemic has impacted Canadians – some have flourished, while
others have been left devastated – demonstrating evidence of a
K-shaped recovery narrative. On the one hand, while Canadians, on
average, appear to be saving more compared to a year ago (16 per
cent of after-tax income, on avg. vs. 14 per cent in Fall 2019),
almost one-in-four (24 per cent; +5 pts) have been saving zero per
cent of their after-tax income compared to the same period last
year. Within the indebted population there has been a significant
increase in the proportion of those who say everyday living is the
cause of their debt (24 per cent). This suggests that more
Canadians who are in debt are struggling to make ends meet, even if
less Canadians (27 per cent debt-free vs. 21 per cent in Fall 2019)
are now in debt overall compared to a year ago.
Younger Canadians – aged 40 or under – from lower income
households, especially those who have a mortgage or are in debt,
appear to have been hit the hardest financially during the
pandemic. Indeed, this group tends to be more likely to report that
their financial situation or debt load has been severely impacted
by the pandemic, are generally having more difficulty paying their
bills due to the pandemic and are less likely to have been
financially prepared for it.
Mental health and finance
Survey results show the pandemic has taken a toll on the mental
well-being of Canadians. Almost half (46 per cent) of indebted
Canadians say debt is having a negative effect on their mental
health – a 10-point increase from two years ago. In fact, indebted
Canadians are far more likely to note that their debt load is
causing them stress (53 per cent; +5 pts) or keeping them up at
night (35 per cent; +7 pts) compared to two years ago.
"The COVID-19 pandemic is causing many Canadians to experience
higher levels of anxiety and fear. Debt is amplifying that, making
us feel more vulnerable to uncertainty," said Dr. Georgia Pomaki,
Leader, Mental Health Specialists at Manulife. "One way of
strengthening our resilience and sense of security is to think
about how we can better prepare ourselves for unforeseen expenses,
which will allow us to respond more effectively to issues as they
arise."
Competing priorities can make it hard to manage your finances.
Should you focus on managing cash flow for the short-term, focus on
retirement contributions, or budgeting for a down payment on a
house? Sorting out financial goals and identifying what matters
most is 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:
www.manulifebank.ca/debtresearch
About the Manulife Bank of Canada Debt Survey
Now in
its tenth year, 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
online by Ipsos between September 20 to
September 26, 2020. National results were weighted by
gender, age, region and education. This survey has a credibility
interval of +/- 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 Bank
Manulife Bank is one of
Canada's original digital banks.
Since our launch in 1993, we've been designing efficient, flexible
products that fit seamlessly into our customers' lives to help make
their decisions easier and lives better. Today, Manulife Bank has
over $27 billion in assets and serves
clients across Canada in all
provinces and territories.
About Manulife
Manulife Financial Corporation is a
leading international financial services group that helps people
make their decisions easier and lives better. With our global
headquarters in Toronto, Canada,
we operate as Manulife across our offices in Canada, Asia,
and Europe, and primarily as
John Hancock in the United States. We provide financial
advice, insurance, and wealth and asset management solutions for
individuals, groups and institutions. At the end of 2019, we had
more than 35,000 employees, over 98,000 agents, and thousands of
distribution partners, serving almost 30 million customers. As of
September 30, 2020, we had
$1.3 trillion (US$943 billion) in assets under management and
administration, and in the previous 12 months we made $31.2 billion in payments to our customers. Our
principal operations are in Asia,
Canada and the United States where we have served
customers for more than 155 years. We trade as 'MFC' on the
Toronto, New York, and the Philippine stock exchanges
and under '945' in Hong Kong.
SOURCE Manulife Financial Corporation