HOLIDAYS One third of Canadians feel they'll never financially recover from the COVID-19 p
Thursday, October 29, 2020 10:21:00 AM
- Canadians working with a financial planner say they are much more confident about their financial health than those who are not.
- More than half expect financial strains to cut into holiday spending. -
The COVID-19 pandemic has had a dramatically negative impact on the financial health of Canadians, with nearly one third (30%) concerned they will not financially recover from the crisis, according to the findings of the newly released FP Canada™ Coping with COVID's Financial Impact survey.
The survey, released in advance of Financial Literacy Month, revealed that 42% of Canadians feel they are not in a strong enough financial position to handle the challenges of the second wave of COVID-19. Nearly as many (41%) confirm that they already feel that they're in a worse financial situation today than they were before the pandemic began. More than one third say they have already had to draw from personal savings or take on new debt to make up for money shortfalls and cover expenses.
"It is alarming to see the significant pain COVID-19 has inflicted on the finances of Canadians. It's also clear that many people are not prepared to endure this continued crisis," said Tina Tehranchian, Certified Financial Planner®, based in Toronto. "While younger Canadians are experiencing an outsized financial impact from the pandemic, it appears that the sandwich generation may be in the worst position. It's clear that regardless of age or location, Canadians who have turned to a professional financial planner have had more peace of mind throughout the challenges of this year."
Canadians with a plan say they're much more confident than those without
Working with a financial planner helps people navigate unforeseen circumstances and better prepare for the future, and that has held true during the COVID-19 pandemic. Respondents who say they use the services of a financial planner were substantially more likely to report they're confident about their financial well-being at the onset of the COVID-19 pandemic (77%) and throughout it (74%) than those who don't use a planner (57% and 57%, respectively). They are also much more likely to worry less about the impacts of the second wave of COVID-19 (68% vs 50%).
"Financial planning is not only for the wealthy, or those with complex household finances," said Alim Dhanji, CFP®, based in Vancouver. "Working with a Certified Financial Planner professional or Qualified Associate Financial Planner™ professional can help every Canadian focus on the priorities that are most important to them, and then build a plan that takes into account every aspect of their financial health. This provides individuals added confidence in their financial future, but also in managing any unexpected life events."
Sandwich generation and younger Canadians bearing the brunt of COVID-19
Canadians aged 45-54 are struggling the most during this pandemic, with 36% of respondents in the sandwich generation — those in their 40s and 50s raising children while also caring for aging relatives — saying they don't believe they'll recover from the financial strains of the pandemic. Less than half say they were in a strong enough financial position before (46%) and throughout (47%) the pandemic to avoid concerns about their financial health.
At the same time, the survey results suggest the worst may be yet to come for younger Canadians. More than half (51%) of the 18-34-year-olds polled say they'd taken advantage of a government subsidy or private-sector deferral program, including 29% who relied on the Canada Emergency Response Benefit. Because a number of key economic stimulus and support programs have come to an end, those who needed government assistance the most may be forced to look for other ways to make ends meet. Already, half of younger Canadians polled say they've borrowed money to make up for financial shortfalls, with 15% turning to family for funds.
Expect fewer gifts this holiday season
The unprecedented financial challenges that weighed on Canadians throughout 2020 are likely to persist into the holiday shopping season, according to the survey. More than half (52%) of respondents say they expect to spend less on gifts this year than in previous years, as many of those who are already experiencing financial burdens seek to avoid stretching themselves any further.
"With the holiday season around the corner, it's not surprising to see people watching their discretionary spending this year," said Caval Olson-Lepage, CFP, based in Saskatoon. "This rings true across the nation and all age demographics, highlighting the severity of Canadians' financial situations and the high degree of caution they're exercising as they continue to cope with the pandemic. Many have taken from their savings or accumulated more debt during this pandemic, so buying an abundance of gifts is unlikely to take priority over managing everyday expenses. The holidays may not be the most wonderful time of year for some people as a result."
It's never too early or too late to start making a plan. Jotting down monthly expenses and income will help Canadians feel in control of the money coming in and out of their households. As Financial Literacy Month gets underway, seeking the advice of a professional financial planner can help ease the stress of getting finances in order.
SOURCE: FP Canada