Getting Help With Your Debt Can Make Life More AffordableOct 15, 2018
How can getting help with debt help you overcome some of your affordability challenges?
It can be hard to predict how debt will change your ability to spend, save, and adjust on a daily basis. Results from our new poll show that those who are overwhelmed with debt are experiencing serious challenges with affordability.
According to the inaugural BDO Canada Affordability Index, three-in-10 Canadians say they don’t have the money to afford the things they need, with 69 per cent saying that saving for retirement or a big purchase is the most challenging.
The Index also reveals that one-in-four Canadians are overwhelmed with debt, and details which Canadians appear to have reached a breaking point. It’s probably no surprise that those overwhelmed tend to skew younger — millennials (18-34 year olds) are one group singled out as being more likely to be overwhelmed with their debt and unsure of what to do about it.
Affordability is a challenge for these younger Canadians. The Index shows that these challenges mean they’re more likely to put off paying off credit card debt, buying a home, having children and retiring at the age they thought they would.
The thing is, affordability can be strongly affected by debt. Results from our poll clearly support the importance of seeking debt relief as soon as possible. When personal debt is a problem, having a strategy to deal with it can help you clear a path to other financial goals.
For the majority of millennials, boosting financial literacy may be the key.
Last year’s BMO Wealth Management Report showed that only 24 per cent of millennials have basic financial literacy, and only eight per cent have high financial literacy. Without a basic understanding of money and debt management, it’s easier to fall into the trap of overspending, accumulating debt and putting off savings goals.
There are lots of fun ways to learn about money, though, even after school is over. The Financial Consumer Agency of Canada (FCAC) provides a good starting point with their self-assessment quiz, which figures out where your skills and knowledge are in comparison to other Canadians.
From there, FCAC also provides resources and tools on everything from budgeting to credit scores to credit card use that can help you learn how to better manage your money.
For millennials (and Gen Xers) with kids, paying daily expenses and making ends meet can be even more challenging.
We found that 34 per cent of Canadians with kids were likely to find their debt overwhelming, compared to 20 per cent of those without kids.
In Ontario, one of the challenges specific to families with young kids is the steep cost of child care. For many parents, childcare fees are a fact of life, but there may be strategies that could help you at least lower your costs. This list of 14 ways to save money on child care from Canadian Living includes some ways to work with your friends who have kids, including sharing a nanny or babysitter or moving closer to family.
Dealing with affordability challenges is tough. When everything seems to add up — utilities, groceries, rent, transportation — it’s easy to feel overwhelmed. Start with a solid plan to get help with debt. Once you’ve made some progress reducing your debt load, you may find you at least some of your affordability challenges have decreased – and you can begin to work towards other financial goals.