Record Debt Lack Of Savings A Dangerous Mix For Bc Households

British Columbians are confident they can afford their cost of living over the next year without adding more debt. However, that optimism only holds if their income and expenses stay the same. Factoring in the prospect of a financial emergency – such as an automotive repair, job loss, or serious illness – less than half have the savings to manage on their own. With Canadians already carrying record levels of consumer debt, this is a troubling sign and indicates borrowing could yet be on the rise in the province.

According to a recent poll conducted by Ipsos on behalf of MNP LTD, 67% of BC residents believe they would need to borrow money in the event of a divorce, while 76% would look to lenders to cover the cost of major car repairs or for the purchase of a new one. Similarly, 76% say they would turn to credit cards and overdraft if they lost their job and 23% would do the same if an illness caused them to miss three months of work.

There are several things that can be done to better prepare for these unexpected costs. The first is to reduce monthly expenses. That could mean eating out less or even downsizing if rent or mortgage payments are unmanageable. The next is to make a habit of saving – putting away whatever you can and working toward a goal of between three and six months expenses in a rainy-day fund. When budgeting, it is important to factor in multiple worst-case scenarios. You hope none will ever happen, but it avoids being taken off guard should one of them come to pass.

An original article discussing the Ipsos poll and concern amongst Canadians were published online on August 9, 2017.