When it comes to the state of personal or household finances during COVID-19, economists liken it to “a tale of two pandemics.”
While some Canadians have been able to save more money than ever before, a large group of people across the country are finding it increasingly difficult to stay on top of their living expenses.
More than one-third of Canadians say their household expenses have increased in the last year and nearly a quarter say they’ve been unable to save any income, according to a new report by FP Canada, shared exclusively with the Free Press ahead of a wide release this week.
The new data also suggest nearly two in five Canadians have experienced a job loss, a pay cut or a reduction in work hours over the past year.
But the findings show a clear difference in the pandemic’s impact on Eastern and Western Canada, with a figurative line drawn along the Manitoba-Ontario border.
“If there’s one thing we can consistently see across the country, it’s that money matters have and will likely continue to be the most lasting struggle out of this crisis,” certified financial planner Caval Olson-Lepage said Tuesday.
“It really is a death by a thousand cuts because it’s little things that compound together to become this big issue,” she said. “You start out with tiny fractions from something like increased utility bills, and then you keep adding more and more increments on other things like food supplies until you realize, wow, I’m spending hundreds of dollars more on these things just because of COVID-19.”
Olson-Lepage, who is based in Saskatchewan, said Western Canada didn’t feel the higher end of COVID-19’s economic impact until the second wave in the fall.
“When it did hit the Prairies though, it hit us quite hard,” she said. “Because for us, a lockdown into the winters really was a lockdown because you couldn’t do anything and were completely stuck inside.”
Numbers from FP Canada show almost half (49 per cent) of Western Canadians who were working as the pandemic began say their professional lives have been negatively impacted, compared to one-third (34 per cent) of Eastern Canadians.
In Manitoba, 43 per cent of respondents said their household expenses have increased due to the pandemic — the highest margins across Canada. And 27 per cent say managing day-to-day living expenses is now their top financial priority (the second-highest rate countrywide).
It’s a stark change from only 12 months ago when paying down debt and saving for retirement were the top priorities in Manitoba and Saskatchewan.
“It’s clear that no Canadian has been spared the impact of the pandemic on their personal finances, with many still living paycheque-to-paycheque,” said Stephanie Douglas, a partner and portfolio manager at Harris Douglas Asset Management in Toronto. “But what really stands out from the data is the fact that many Canadians are still struggling.
“While household balance sheets have benefited from government assistance, these findings are challenging the popular belief that this pandemic has been beneficial to everybody’s bottom line. In fact, it has resulted in increased costs across the board.”
In terms of savings, 26 per cent of Manitobans say they’ve been unable to save some money in the past year, while 19 per cent have taken on increased credit-card debt. Around 12 per cent of people have had to borrow money from loved ones and 17 per cent have tapped into a personal line of credit. Five per cent say they’ve had to refinance their mortgage.
On top of that, at least 15 per cent of people in the province don’t have any savings and only 35 per cent of them have less than six months’ worth of expenses in savings. Around 10 per cent have less than one month of savings and 19 per cent have more than one year of expenses saved.
Meanwhile, the state of personal finance is quite different in Atlantic Canada and British Columbia. Almost one in five Atlantic Canadians said they received a pay increase in the past year, and 22 per cent of British Columbians said they’ve been able to increase the amount of money put into savings or investments.
“I think the key right now for people is to go to their financial institutions and seek help from an expert to manage their income and assets,” said Olson-Lepage, citing numbers that show those who work with a financial planner were 25 per cent less likely to say their expenses had increased due to the pandemic than those who do not.
“Things will remain difficult for a while. But if you start making these changes today, you will be able to find an important sense of security as we move forward with these next stages of COVID-19.”
