The COVID-19 pandemic has taxed the world’s ability to react and deal with a health crisis. It has wreaked havoc on world economies and pushed some industries to the brink of collapse.
To no one’s surprise, it has also squeezed household budgets and personal finances. A survey released this week by Coast Capital Savings suggests it has exposed just how financially vulnerable some people are.
The survey found that 37 per cent of Island and Lower Mainland residents have seen their finances depleted over the past three months, 23 per cent report their debt levels are up and 38 per cent of those working have had their employment compromised to some degree.
Matt Atkinson, Coast Capital’s director of strategic initiatives, said the survey results confirm what many banks and credit unions had believed — that most people are not financially prepared for unexpected crises.
“This validates that a lot of folks aren’t ready,” Atkinson said.
“Obviously, this is fairly significant and nobody expected a global pandemic, but almost everyone is going to have circumstances in their lives when their finances will be interrupted and the question is: ‘Are they prepared for it?’ I think this shows that many Canadians are not.”
Atkinson said the survey offered few surprises, as the credit union had heard stories from members about how hard some people had been hit by the economic shutdown.
He said the survey was designed to provide better information on just how deep the impact had been felt and a better understanding of what was happening around the province.
The survey of 802 people carried out by Angus Reid Forum found 28 per cent of respondents missed or made only partial rent or mortgage payments and 25 per cent had accessed an income top-up or replacement from the various federal and provincial programs available.
Twenty-seven per cent reported having trouble setting and sticking to a budget, 39 per cent said it affected their ability to save for the future and 42 per cent said they had used savings to make ends meet.
“This is an incredibly stressful time for many individuals and families,” Atkinson said.
“The impact was swift, wide-reaching and significant for those who haven't accumulated savings or rainy-day fund to help provide a cushion.”
While many financial institutions have offered programs such as mortgage deferral or reduced interest rates on some products to help people through the pandemic, Atkinson hopes the experience will provide an incentive to work on a financial plan to ensure people can manage the next crisis.
“It might be a surprise roof leak or the need for expensive car repairs, but it is inevitable that there will be something that you hadn't budgeted for,” he said.
Atkinson hopes people will turn their stress into action and access help to establish savings plans.
“I’m optimistic we will see a behaviour change in many Canadians,” he said.
Atkinson thinks the country’s financial institutions could become more flexible and understanding.
“If you want to be relevant and want to show care and empathy to clients and members who are facing this, you have to support them,” he said, noting that can mean altering products and services and providing relief.
The survey suggested that, despite the financial doom and gloom, most people were weathering the storm as 75 per cent of respondents said they have been able to pay rent or mortgages and 72 per cent reported being able to stick to their budget.