Posted By 
A third of Canadians were financially unprepared for the pandemic, and more than 75% think Covid-19 has impacted their mental health, according to a Manulife Debt Survey released late Tuesday. Young people are particularly concerned that their hopes for home ownership are slipping out of reach: two thirds of Canadians served who do not own a home worry about saving for one.
A whopping 36% said they worry significantly about saving for a home, while 28% are concerned about supporting their children through post-secondary education (28%) and 28% about saving for retirement.
On average, Canadians have been allocating nearly half their income to essentials like food and housing since COVID-19 began, with 58% of homeowners and 54% of renters worry about making 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
The survey found 35% admit they were financially unprepared for the pandemic. 74% believe their financial situation has been impacted as a result of the pandemic and 69% of them say the impact has been overall negative: 42% worry that it may take them over a year to recover to pre-COVID-19 levels.
One in four are struggling to keep up with their bills, with one in six laid off due to COVID-19: an equal number say they would have been laid off had it not been for the wage subsidy provided by Ottawa.
Some have flourished
The survey reveals a sharp disparity in how the pandemic has impacted us, with some flourishing as others have been devastated. Manulife views this as evidence of a K-shaped recovery narrative. On the one hand, while Canadian on average, appear to be saving more compared to a year ago (16% of after-tax income, on avg. vs. 14% in Fall 2019), 24% have been saving absolutely no 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%. This suggests more Canadians who are in debt are struggling to make ends meet, even if fewer Canadians (27% debt-free vs. 21% on 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. This group tends to be more likely to report that their financial situation or debt load has been severely impacted by the pandemic.
Mental health and finance
Survey results show the pandemic has taken a toll on the mental well-being of Canadians. Almost half (46%) of indebted Canadians say debt is having a negative effect on their mental health – a 10-point increase from two years ago. Indebted Canadians are far more likely to note that their debt load is causing them stress (53%) or keeping them up at night (35% ) 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.”
For more on the survey, click here.
