Rising cost of living forces Canadians to make tough sacrifices: Three in 10 are eating less to save, sharing expenses from housing to carpooling, childcare and groceries
MNP Consumer Debt Index rises to 89 points as lower interest rates improve financial outlook
CALGARY, AB – October 16, 2024 – Burdened by high living costs, Canadians are making difficult sacrifices and finding ways to share expenses to make ends meet. According to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos, nearly a third (30%) of Canadians say they have turned to bill-splitting strategies — such as carpooling, buying in bulk, sharing subscriptions, and childcare. More than one in 10 (13%) are saving money by moving in with friends, partners, or family members, or seeking additional roommates or co-living spaces. Nearly three in 10 (28%) Canadians say they’ve even resorted to eating less to save money.
“We’re witnessing a bill-splitting boom as Canadians adapt to the high cost of living. Strategies like sharing expenses and co-living arrangements showcase not only the resourcefulness of many households but also the financial pressures they’re facing,” says Grant Bazian, President of MNP LTD, the country’s largest insolvency firm. “These measures reflect the harsh reality of soaring living costs, compelling Canadians to find new ways to save. It's particularly concerning that nearly three in 10 report cutting back on food to make ends meet.”
Canadians are making other sacrifices to manage costs. Half (51%) say they’ve tried to save money by grocery shopping more strategically. Nearly half also say they’re avoiding impulse purchases (46%) or have stopped eating in restaurants or getting take-out (44%). The bill-splitting trend is more common among Canadians aged 18 to 34 and those living in British Columbia and Alberta. Similarly, shared living arrangements are more prevalent among younger Canadians, British Columbians, and lower-income households.
Cost-cutting measures and lower interest rates create breathing room in some household budgets
Prudent cost-cutting efforts and recent interest rate reductions seem to be helping as Canadians report some improvements in their financial situation. The MNP Consumer Debt Index has increased by four points from the previous quarter to 89 points, signalling Canadians are feeling more positive about their finances. Canadians are building up the bank this quarter, reporting they have $937 (+$155) left over at the end of the month on average — the most they have had after all expenses in the last five years. Just over four in 10 (42%) Canadians say they’re $200 or less away each month from financial insolvency. That is the lowest recorded proportion since September 2018 (40%).
“While cost-saving behaviours and lower interest rates have positively impacted Canadians’ perceived financial well-being, a significant minority — close to four in 10 — still report being on the brink of insolvency, indicating they’re struggling to make ends meet,” says Bazian. “Still, financial pressure is easing, providing more flexibility for individuals to manage their debts and invest in the future.”
Impact of interest rates on debt and financial outlook
With Canadians expecting interest rates to continue falling over the next few years, perceptions of their ability to absorb interest rate increases have improved. A quarter (24%, +3 pts) say they’re much better equipped to manage an interest rate increase of one percentage point than they used to be, up three points since last quarter. More Canadians are looking positively to the future, with three in 10 (31%, +2 pts) expecting their debt situation to improve over the next year and fewer believing it will worsen (12%, -4 pts).
Even after interest rate cuts this year, almost half (48%, +1 pt) of Canadians say they are concerned about their ability to repay their debt, and would still be if rates continued to decline. While slightly fewer say they will be in financial trouble if interest rates go up, more than half (54%, -3 pts) still indicate they would be in trouble. Almost half of Canadians who share housing (46%) or are bill-splitting (44%) are at risk of insolvency.
“Although inflation has eased and interest rates have fallen, many Canadians still feel the heavy burden of accumulated debt. Despite some relief, the difficult truth is that cost-cutting measures alone may not provide adequate support for those grappling with significant debt,” explains Bazian. “Those looking to regain control of their financial situation should consider speaking with a Licensed Insolvency Trustee for guidance. There are options, and Bankruptcy is not the only recourse.”
Licensed Insolvency Trustees provide unbiased advice on options, including debt consolidation, debt management plans, budgeting, Consumer Proposals, and Bankruptcy. They are the only federally regulated debt professionals authorized to administer government-regulated insolvency solutions such as Bankruptcies and Consumer Proposals.
“While bill-splitting strategies can offer temporary relief, they often don’t address the root of deeper debt issues. For those feeling overwhelmed by bills and debt, seeking advice from a Licensed Insolvency Trustee is a crucial step toward long-term financial stability,” says Bazian.
MNP’s extensive network of Licensed Insolvency Trustees provides free consultations in over 200 offices nationwide, delivering local, personalized support to help Canadians navigate their debt options.
In terms of how Canadians are planning to cut costs or save money over the next year, the survey revealed the following:
Canadians' Top Money-Saving Strategies Over the Next 12 Months
- Bill splitting – 27%
- Living with a partner, friend, family member, or roommate – 14%
- Creating a budget / recording all expenses – 14%
- Cancelling subscriptions – 13%
- Stopping eating in restaurants or getting takeout – 13%
- Avoiding impulse purchases – 13%
- Reducing utility consumption – 13%
- Going thrift shopping – 12%
- Finding free or low-cost entertainment – 12%
- Grocery shopping strategically – 12%
- Negotiating bills – 11%
- Cutting vices – 10%
- Moving somewhere more affordable – 10%
- Splitting grocery costs / buying in bulk with roommates, friends, or family – 9%
About MNP LTD
MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 offices from coast to coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3-Minute Debt Break Podcast.
About the MNP Consumer Debt Index
The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.
Now in its thirtieth wave, the Index has increased to 89 points, up four points since last quarter. Visit MNPdebt.ca/CDI to learn more.
The data was compiled by Ipsos on behalf of MNP LTD between September 6 and September 11, 2024. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.
Grant Bazian
President
CIRP, LIT
