Nearly 40% of Canadians Borrowing Money to Cover Daily Expenses: Federal Research

A woman shops for produce in a grocery store in Toronto in a file photo. (Nathan Denette/The Canadian Press)

Nearly 40 percent of Canadians are borrowing money to cover the rising costs of daily expenses like groceries and rent, says new federal research.

“The percentage of Canadians who borrow money to cover daily expenses increased from 26% in 2020 to 38% in September 2022,” wrote the Financial Consumer Agency of Canada in a report published in November 2022, as first reported by Blacklock’s Reporter.

The federal agency, which enforces consumer protection legislation, added in its report that the “proportion of Canadians who used online lenders or payday loans more than tripled from August 2020 to September 2022,” increasing from under 1.5 percent to over 4.5 percent.

The report, titled “Consumer Vulnerability: Evidence from the Monthly COVID-19 Financial Well-being Survey,” also said that the percentage of Canadians who are dipping into their savings to keep up with rising costs rose from 33 percent in 2020 to 48 percent in June 2022.

“As of September 2022, the survey results show that over the past several months, financial hardships have increased for many Canadians due to the rapidly evolving economic environment,” wrote researchers.

“In the current economic context, many Canadians are facing the biggest financial challenges of their lives. More are borrowing money to cover their day-to-day expenses, including by using high-cost loans,” said the report.

The agency’s findings were based on monthly questionnaires posed to 1,000 Canadians nationwide between August 2020 and September 2022.

Researchers said that around 41 percent of Canadians reported they didn’t have sufficient emergency funds to cover unexpected expenses, while 25 percent said they regularly spent more than their monthly income.

Forty-two percent of Canadians surveyed said they believe finances “control their life,” while 41 percent said they were worried that “their money would not last.”

Unexpected Expenses

A Statistics Canada (StatCan) report published on Feb. 13 said that around one in every four Canadians is currently unable to cover an unexpected cost of $500.

“In fall 2022, over one-third (35%) of Canadians reported that it was difficult for their household to meet its financial needs in the previous 12 months,” said the report. “When asked whether their household had the resources to cover an unexpected expense of $500, 26% said that they would be unable to do so.”

StatCan also said the “vast majority” of Canadians were concerned with rising food and gasoline costs, while 44 percent were worried about their ability to afford housing or rent.

The federal agency also found that almost half of Canadian aged 35 to 44 years “found it difficult to meet their financial needs in the previous 12 months.”