Rising Expenses Hurting Canadian Savings Amid Enduring Pandemic

(CNW Group/Money We Have)

As the pandemic continues its stranglehold on society, a large group of Canadians are finding it increasingly difficult to stay on top of the cost of living. More than one-third (34 percent) of Canadians say their household expenses have increased in the last year and nearly one-quarter (24 percent) say they have been unable to save money, according to a new survey by FP Canada™. The new data also reveals nearly two-in-five Canadians (39 percent) who were working at the outset of the COVID-19 pandemic say they’ve experienced a job loss, a pay cut or a reduction in work hours over the past year.

At the one-year anniversary of the declaration of the pandemic by the World Health Organization, FP Canada’s Tale of Two Pandemics report brings to light the varying effects this worldwide crisis has had on Canadians — almost as though there are two vastly different pandemic experiences taking place across Canada depending on where they live, their gender, age, income and approach to financial planning. One thing is consistent however — money matters continue to be at the forefront of everyday Canadian struggles.

It pays to plan
The survey of more than 1,500 Canadians showcases how working with a professional financial planner is beneficial during good times and bad. Those working with a financial planner are more than twice as likely to have at least one year’s worth of expenses to fall back on. Given the current economic climate and labour market, 81 percent have money tucked away, but many (41 percent) have less than six months’ worth, particularly those who aren’t working with a financial planner (47 percent vs. 28 percent among those who are).

“Financial planning pays off and it shows. When times are good, a sound financial plan will help you reach your goals, and when times are tougher — like the COVID-19 pandemic — it will provide the protection you need to get through it,” says Wendy Brookhouse, a Qualified Associate Financial Planner™ professional and founder of Black Star Wealth. “It’s never too early or too late to start planning, no matter your age, career stage or income level. The data proves that people are financially weathering this pandemic far more effectively when they work with a professional.”

Many of the 30 percent of Canadians who use a financial planner are able to adapt quicker to changing financial realities, which helps keep their household expenses from rising during the pandemic. In fact, those who work with a planner were 25 percent less likely to say their expenses had increased due to the pandemic (28 percent) than those who do not (37 percent).

Financial worries greatest in the West
The survey shows a clear difference in the pandemic’s impact on Eastern and Western Canada, with a figurative line drawn along the ManitobaOntario border. Half (49 percent) of Western Canadians who were working as the pandemic began say their professional lives have been negatively impacted by the crisis, compared to one third (34 percent) of Eastern Canadians. Workers in Western Canada, already hurting due to the oil price collapse, were also 50 percent more likely to have been forced out of the labour market (21 percent in Western Canada vs 14 percent in Eastern Canada) or experience a pay cut (19 percent vs 13 percent). At the same time, nearly two-in-five (37 percent) Western Canadians say their household expenses have increased during the pandemic, compared to 32 percent of Eastern Canadians.

“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 and trying to stay on top of daily living expenses,” says Stephanie Douglas, a Certified Financial Planner® professional, Partner and Portfolio Manager, Harris Douglas Asset Management Inc.

“But what really stands out from the data is the fact that many Canadians are struggling. Household expenses are eroding the financial well-being of lots of people. While many household balance sheets have benefitted from government assistance, the 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.”

Different realities across the gender divide 
While work-life balance is challenging in ordinary circumstances, the pandemic has illuminated the very real pressures that exist in many households across Canada. More than one-in-four Canadians (28 percent) say they’ve taken on greater responsibilities managing household/family finances during the pandemic. Adding to this, almost one-in-six Canadians, both men (15 percent) and women (16 percent), say they’ve been forced to take on unpaid care-giving responsibilities during the pandemic. One-in-six Canadians—and nearly one-in-five Canadian women—say they have been forced out of the labour force entirely.

“Many working Canadians are juggling family, childcare and other household duties, with limited resources,” says Graham Plumb, a CFP professional and CEO of Moola Financial Coaches. “With continued lockdowns in regions across the country, many Canadians have had no choice but to stay home and tend to their personal obligations. Working with a CFP professional or Qualified Associate Financial Planner™ professional can help Canadians everywhere better manage their conflicting obligations.”

Coast-to-coast considerations
The way the pandemic has impacted Canadians varies greatly from region to region, notably:

  • Nearly half of Albertans who were working at the onset of the pandemic say they have been forced out of the labour market (24 percent) or had to reduce their work hours (25 percent) in the past year — the highest level in the country.
  • Two-in-five Ontarians working at the beginning of the pandemic say their professional lives have suffered over the past year — the highest rate in Eastern Canada.
  • Respondents from Manitoba and Saskatchewan were the most likely to say their household expenses have increased during the pandemic — nine percent above the national average of 34 percent. Those in the Prairies (20 percent) were also the most likely nationwide to have experienced a pay decrease in the past year.
  • While not wholly unscathed, workers in B.C. and Atlantic Canada were more likely than the rest of the country to see positive financial changes over the last 12 months.
  • One-in-five Atlantic Canadians (19%) report they received a pay increase in the past year, while nearly one quarter (22 percent) of British Columbians say they’ve been able to increase the amount of money they put into savings or investments this year.

For more key findings from the FP Canada Tale of Two Pandemics report, please visit https://fpcanada.ca/docs/default-source/news/tale-of-two-pandemics-survey.pdf



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