MNP Consumer Debt Index: Canadians Caught in the ‘Pre-Spent Paycheque’ Cycle as Financial Pressures Drive ‘Lifestyle Shrinkflation’

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More than half (57%) of Canadians say they are cutting back on travel and experiences due to financial pressures, including higher costs, debt obligations, or global uncertainty. Among those cutbacks, two in five (42%) are cutting back on travel or vacation plans, about the same proportion (40%) are cutting back on concerts, festivals, sports, movies or other events, and more than one-third (35%) are cutting back on weekend trips or day trips. More than half (56%) are cutting back on dining and socialization, including nearly half (48%) who are cutting back on restaurants, patios, takeout or coffee shops, more than one-quarter (28%) who are cutting back on gifts, weddings, birthdays or other celebrations, and one in five (21%) who are cutting back on hosting family or friends.

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At the same time, many are adjusting or scaling back plans because of cost, with nearly one quarter of Canadians (23%) cancelling plans or activities or avoiding making them altogether, while one in 10 (9%) are turning to credit or borrowed funds to maintain plans and activities. Younger Canadians are more likely than those over 55 to report cutting back across all categories.

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“Canadians are not just tightening their budgets. Many are shrinking parts of their lifestyle to keep up with the cost of essentials,” says Bazian. “When people are cutting back on plans, using credit to maintain activities, or scaling back on the things that help them feel connected and supported, financial pressure can start to affect more than household balance sheets. It can weigh on overall quality of life and emotional well-being.”

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Interest rate concerns persist despite signs of gradual adaptation

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Canadians’ capacity to absorb further interest rate increases remains constrained, even as the Bank of Canada has held its key rate steady so far this year. Similar shares feel better (24%) or worse (22%) about handling a one-percentage-point rate increase, but when framed as an additional $130 in monthly interest payments, just one in five (21%) say they could manage the added cost, while more than one-third (35%) say they could not. As elevated borrowing costs continue to weigh on households, three in five Canadians (62%, +1 pt) say they desperately need rates to come down, and more than half (53%, no change) express concern about financial trouble if rates rise.

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“Stable interest rates may offer some predictability, but they don’t necessarily create relief when other financial pressures remain unpredictable,” says Bazian. “With households still navigating elevated living costs, debt-servicing demands, and broader economic uncertainty, even a modest increase in required payments can force difficult trade-offs, from cutting back further to relying more heavily on credit to stay current.”

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With many Canadians saying their income is already spoken for before it arrives, Bazian says the warning signs may not always look like a missed payment or a collection call. A household may appear to be managing by cutting back, delaying plans, reducing savings, or leaning on credit, while still moving deeper into a rolling shortfall. Getting an objective view of the full financial picture can help identify whether the current approach is sustainable before the options for relief become more limited.

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“Speaking with a Licensed Insolvency Trustee does not mean someone has already decided to file a bankruptcy or consumer proposal,” says Bazian. “It can simply be a confidential conversation about their situation, what is affordable, what is not, and what options exist to help stop the cycle of using the next paycheque to catch up from the last one.”