The Bank of Canada warns the household vulnerabilities of many Canadians are on the rise
The Bank of Canada released its biannual Financial System Review (FSR) depicting the current state of Canada. Although, the findings from the FSR are unchanged in terms of financial stability, the BOC warns the household vulnerabilities of Canadians have increased.
The Bank says household debt and the imbalances of the housing markets in Toronto and Vancouver are a cause of concern. With rising house prices, coupled with job losses and financial stress – many Canadians are struggling to manage their household debt.
The BOC also warns if a major event occurred like a drastic increase in unemployment, it would trigger shocks throughout the financial system.
“Many Canadians are struggling to pay their bills because of their debt load and the lack of savings,” says Jeffrey Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“At the end of the day, many Canadians may be faced with a reduction in their income as a result of job loss or reduction in hours, unless they are prepared, this will send them over a financial cliff,” says Schwartz.
Consolidated Credit offers the following tips for Canadians who are struggling to manage their debt:
- Do you need it? One of the best ways to avoid debt is not to take on any more of it. Many Canadians are living beyond their means and taking on additional debt. If you don’t need it, don’t buy it!
- Set financial goals for yourself. Life happens. Unexpected expenses and emergencies can force us to take on more debt if we are not prepared. Creating an emergency fund of 3-6 months’ worth of expenses will help you avoid taking on additional debt because life happened. Set up an automatic deduction from each pay cheque into a savings account to build this fund.
- Put the brakes on overspending with a budget. A budget will help you to spend only the money you have on a monthly basis. You also can keep track of your budget by using a budgeting app.
- Monitor your progress as you go on your new financial journey. As you venture down the road of fiscal responsibility, track your progress and celebrate your success. Before you know it, you will be debt free and living a financially independent life. If aren’t achieving the success you desire, reach out for help, you are not alone.
If you unable to manage your household bills effectively and it is causing you to lose sleep at night, you are not alone. A trained credit counsellor can help you manage your debt and reclaim your life. You can call one of our counsellors at 1-888-294-3130.