COVID-19’s far-reaching effects have negatively affected 50% of Canadian households’ finances, according to TransUnion’s latest Financial Hardship Study.
TransUnion also reported that as of November, 39% of respondents believed that their household finances were worse than they planned. Of these, 41% pointed to reduced worked hours as the main driver of instability.
TransUnion said that this uncertainty might mount over the next few months.
“Deferrals on loans are beginning to run off and government subsidies are expiring, both of which will impact the consumer wallet,” TransUnion said.
To preserve their cash flow, 53% of consumers said that they have cut back on their discretionary spending. Another 48% said that they have allocated fewer funds towards holiday gifts compared to prior years, while 19% said that they will be spending “a lot less.”
As for recovery plans, 32% of respondents said that they will pay their debts only partially – a risky tactic that could pull down their credit scores significantly, TransUnion warned. Another 28% said that they will be withdrawing from their savings and investments.
In terms of demographics, members of Generation Z continue to be the most affected cohort at 67%. Gen-Z-ers (38%) and Millennials (35%) were also found to be more likely to borrow cash from family and friends.
Still, 62% of impacted respondents said that they can continue paying their financial obligations for at least a month or longer. On average, households’ monthly shortfall was at $875, down 5% from the last survey.
At least 48% of Canadians were also looking forward to a better year ahead.
“With vaccines on the horizon and the announcement of additional government subsidies, Canadians are feeling somewhat more optimistic about the future,” TransUnion said.