We’re preparing for the worst while hoping for the best
Canadians regaining confidence about personal finances, a new national survey finds
Most Canadians are beginning to regain confidence in their finances after the initial toll of COVID-19, despite the demographic of 18 to 34 year olds hit hard by job loss, a new national survey has found
IG Wealth Management released a midyear update to its annual Financial Confidence Index in partnership with Ipsos Canada, which conducted the survey to see how Canadians were faring amid a global pandemic.
The survey was conducted in mid-May after the initial job losses and financial hits caused by the COVID-19 pandemic and after government programs including the Canada Emergency Response Benefit (CERB) had been rolled out, while provincial economies across the country were starting to reopen.
A total of 2,605 Canadians across the country participated in the survey.
A previous national survey in April by Research Co. found that Canadians were more concerned about their financial situations, especially savings, than they were during the peak of the 2008 financial crisis.
But now, according to the Ipsos survey, Canadians reported feeling more confident in their financial futures and about meeting their financial goals, resulting in the Financial Confidence Index rising four points (from 56 to 60) since November 2019.
Brent Allen, senior vice-president of distribution operations at IG Wealth Management, said the survey results came as a surprise, but they show Canadians are preparing for the worst while remaining optimistic.
“People are taking control of their personal situation where they can,” he said.
Canadians between 18 and 34 years old reported being hit hard by job loss.
This age group was disproportionately affected by the pandemic, with 27 per cent reporting their jobs had been lost and 29 per cent having their work hours cut.
This is probably because younger Canadians may be graduating, looking for summer jobs, in the early years of their careers or perhaps in an industry hit hard by the pandemic, such as the service industry, Allen said.
“The service industry is certainly a big part of what (younger Canadians) do to earn income for schooling and starting out, and so I think those factors certainly impacted the younger demographic,” he said.
Canadians’ sense of control over their personal finances has dropped since 2019, according to the survey. Allen said that’s because while Canadians might feel more confident in their own abilities to financially weather a second wave, they’re not able to control outside influences and have to prepare for the worst.
“I think that people actually are … planning for the worst, and the longer term,” he said. He said now is the time for Canadians to consider their emergency funds, whether it’s a pre-existing savings account or a line of credit.
It’s also important to budget more stringently than before, Allen said, suggesting cutting down on extra costs such as monthly subscriptions or a second car.
“To put one of your cars up on layup for a short period of time can save you hundreds of dollars a month in insurance,” he said.
He also suggested people look into payment deferral for mortgages or other debt, and that they consult a financial professional. The survey found that Canadians with financial advisers were significantly more confident than those without.
The Financial Confidence Index is usually released annually in November. Allen said the results of the November survey will depend on certain factors, such as whether there is a significant second wave of the virus, but regardless he expects Canadians’ financial confidence to more or less remain the same as they continue to prepare for the worst while hoping for the best.