Pattie Lovett-Reid

Chief Financial Commentator, CTV

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The pandemic has wreaked havoc on so many elements of our lives. From home affordability, to buying gifts over the holiday season, to the negative impact on our mental health.

A new survey out Thursday from Manulife Bank found that 61 per cent of Canadians were still planning on buying gifts this holiday season. That is a decrease of five per cent from the fall of 2018. 

In fact, there is a cautious tone following the financial upheaval of the pandemic. 

Three years ago, 61 per cent were willing to go into debt to buy presents. The current survey revealed that number has dropped to 53 per cent and only one in five said their holiday budget is higher this year. 

In the midst of the pandemic, families that may never have experienced a degree of financial flexibility found themselves paying down debt. Spending restrictions and government support programs resulted in a little financial freedom. Money was spent wisely trumping the old desire to spend at all costs. For households who had been racking up debt and spending as if there is no tomorrow, this new money mindset could be a very good thing for their household in the long run. 

However, clearly this isn't great news for retailers still struggling to get into the black this holiday season. Retailers remain hopeful those that can afford to spend will continue to do so responsibly. Yet, at the same time it is understandable that households are cautious, not wanting to repeat past spending tendencies while grappling with the fear of the unknown and risks associated with the pandemic.

Meanwhile, the dream of homeownership is still very much alive despite potential buyers growing skeptical. 

With real estate prices hovering at all-time highs, cobbling together a downpayment still remains elusive to many. 

I reached out to Rick Lunny, president and CEO of Manulife Bank via email and asked, "given the financial challenges so many Canadians face does this mean many will have to postpone or put their dreams on hold?"

"What we’re finding is that Canadians have the opportunity today to achieve financial success. Their dreams are within grasp, yet perhaps they have to be more flexible in their needs versus their wants,” Lunny wrote. 

“For example, it could mean buying a condo instead of a house for their first home, or considering buying in other than the big cities or buying a house with a rental suite.”
But, the Manulife study highlights the frustration from potential homebuyers. 

When it come to real estate, nearly three-quarters (73 per cent) of Canadians who do not own a home want to own one but can’t afford to. In addition, most Canadians (71 per cent; +4 pts vs. spring of 2021) are worried about housing prices in their local community, with a vast majority (87 per cent; +3 pts vs. spring of 2021) believing that there is an affordable housing crisis in Canada.

Right now, high prices extend beyond real estate into just about every aspect of our lives. Canadians are well aware that with inflation as high as it is our standard of living has decreased and our wages are simply not keeping pace as households fall further behind.

Canadians have good reason to be concerned and adopt a cautious tone. 

That being said, it is not surprising that 88 per cent of those surveyed are worried about inflation. As more Canadians acknowledge that the cost of living has increased since the spring, 31 per cent believe their mental health has deteriorated during the past year and only 12 per cent have seen an improvement. 

The anxiety stems from fear of further lockdowns and restrictions and high inflation. 

And yet given all the uncertainty, does this mean we should abandon our dreams and goals? 

Absolutely not. 

We just need a little financial flexibility, according to Lunny. 

"Thinking about where to be more flexible when it comes to your finances, it’s great to start by assessing your overall spending and understanding fixed expenses versus variable expenses. The circumstances of the pandemic forced everyone to reduce their spending on many of these variable expenses.”

Lunny said, “Going forward let’s not fall back to where we were.” 

He added that embracing financial flexibility could include:

1. Entertainment expenses like going to the movies or sporting events
2. Rethinking the number of times you’re dining out or ordering take-out
3. Monthly subscriptions for services such as video or music streaming 

There are a lot of financial wildcards and potential headwinds for Canadians. However, small changes, a little financial flexibility over extended periods if done with consistency, can have a big impact on your households bottom line.