Canadians still feel financially stretched despite improvement: TransUnion survey

The credit reporting agency said Canadians are making deliberate trade-offs to manage their budgets as they remain focused on essential expenses. Photo by Artur Widak/NurPhoto via Getty Images

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While its survey suggests a gradual improvement in Canadians’ financial health, driven by stronger household incomes and growing confidence about the year ahead, many households continue to feel financially stretched.

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“While improving incomes and easing economic conditions are helping households regain their footing, affordability continues to shape everyday financial decisions,” said Matt Fabian, senior director of financial services research and consulting at TransUnion Canada.

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One-quarter of consumers reported an increase in household income over the past three months, while nearly one in four said their finances are better than expected so far this year – the highest level recorded in the past year, the survey said. However, those gains do not appear to have translated into broad financial relief.

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Fabian said many Canadians have adapted to sustained periods of economic uncertainty and continue to make choices through an affordability lens. They’ve become more intentional with how they spend, borrow and manage their financial health as they adapt to a higher-cost environment, he added.

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The survey said 45 per cent of Canadians expressed optimism about their household finances over the next 12 months, but despite this improvement, half say their income isn’t keeping pace with inflation, which has been ranked by 86 per cent of respondents among their top three household financial concerns.

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The credit reporting agency said Canadians are making deliberate trade-offs to manage their budgets as they remain focused on essential expenses while remaining selective about discretionary purchases.

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Some of these include 51 per cent cutting back on discretionary spending, such as dining out, travel and entertainment, 26 per cent are cancelling subscriptions or memberships, and 18 per cent choosing to pay down debt obligations faster, TransUnion said.

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Meanwhile, among those surveyed, 11 per cent increased discretionary spending, up three percentage points year over year, signalling early signs that some households are beginning to regain financial flexibility.

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