Temur Durrani

Multi-Platform Writer

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Following months of instability from a global health crisis, new numbers tell a socio-economic tale of two very different types of Canadians. 

It’s what one of the country’s oldest and largest firms, BDO Debt Solutions, is calling “a story of the haves and have-nots.”

According to the annual BDO Affordability Index released Monday, 43 per cent of polled Canadians have accrued additional debt due to the COVID-19 pandemic, which is up four per cent from 2020. 

The report, which drew statistics from surveys conducted by Angus Reid, found 26 per cent of Canadians incurred at least one new type of debt for the first time this year. Of those, seven in 10 indicated it’s made their standard of living worse. 

Yet, on the flipside, some Canadians have actually been saving more than ever before during the last couple of waves of the pandemic. Around 28 per cent of respondents across the country managed to decrease their spending, save money and pay down their debt. 

So, why is that? BDO’s senior vice-president Jennifer McCracken said the answers lie in where those numbers come from. 

In a phone interview, ahead of a wide release of BDO’s report, McCracken pointed to the inherent socio-economic status and geographic location for the “haves” versus the “have-nots.”

She said the “haves” — those with higher saving levels and lower debt so far during the pandemic — are primarily either people living in British Columbia, Canadians making $100,000 and more, or those with a university education.

She added that the “have-nots, with almost completely opposite financial situations,” are mostly women, people between the ages of 35 and 54, or Atlantic Canadians.

“We can clearly see the difference between those two groups,” McCracken said. “And what’s most interesting is that those debt levels come from such starkly different places. 

“The people that saved their money did so because of non-essential things like travel and dining out, which they mostly forgoed because of COVID. While, at the same time, people that took on more debt did so because of essential things, like groceries and housing, which they began to pay more towards.”

On top of that, McCracken suggests the differences in those groups actually affect key personal decisions, which in turn could impact the future of Canada’s economy.

“We’re not saying haves and have-nots just for the sake of using a term,” she said. “This is something that will certainly spill into many important financial factors for the country at large.”

BDO numbers show one in 10 Canadians are now carrying credit card balances for the first time; at least 60 per cent are not on track to retire based on current savings; and 45 per cent are facing affordability barriers to owning a home. 

That, in turn, is also causing many Canadians to be heavily reliant on government benefits.

Three in ten Canadians accessed government benefits during the pandemic, and more than 76 per cent of those described the aid as “very important” or “essential” to their finances.

Although only four per cent of Canadians continue to receive government relief per BDO numbers, “they are deeply dependent on them,” McCracken said. 

She cited the 65 per cent of Canadians who are not confident that they can maintain their current standard of living once they stop receiving those aid packages. 

“For all these reasons, we’re definitely going to see many people keep or create emergency funds and nest eggs because of the instability still all around us,” McCracken said. “It’s going to be an interesting year of data ahead with many shifting priorities.