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Canadians making tough spending decisions amid headwinds



In the face of economic headwinds and growing concerns about a potential downturn, many Canadians find themselves grappling with tough spending decisions, according to a recent survey by TransUnion. The study, released on Tuesday as part of TransUnion's Consumer Pulse series, revealed that a significant portion of respondents anticipate challenges in meeting their financial obligations in the coming months.


The survey highlights a striking statistic: 33% of Canadians surveyed foresee an increase in their bills and loan repayments over the next three months. Even more concerning is that 28% of respondents expressed worry about being unable to pay one or more of their current bills and loans in full. Matt Fabian, the director of financial services research and consulting at TransUnion Canada, emphasized the vulnerability Canadians face due to higher interest rates and an elevated cost of living.


"Consumers are forced to make trade-off decisions on how to allocate their disposable income in a more expensive environment," stated Fabian, emphasizing the challenging financial landscape Canadians currently navigate. Despite their inherent resilience, many consumers report the increasing difficulty of covering bills and loans, potentially leading to additional interest charges.


The research indicates a prevailing sense of recession fears among Canadians. A substantial 57% of survey respondents expressed intentions to reduce discretionary spending, signaling a shift in consumer behavior. Additionally, 36% are proactively building up savings, while 31% are focused on paying down debts.


"Canadians are spending less, saving where they can, and turning to credit to help manage their household income cash flow," Fabian observed, shedding light on the adaptive strategies Canadians are adopting in response to economic uncertainties.


The survey delved into the impact of higher living costs on household finances, revealing that 43% of respondents found their financial situation worse than planned in the fourth quarter. Alarmingly, 57% expressed a lack of optimism regarding their household finances.


The study also shed light on the importance of credit access amid these economic challenges. With household finances facing headwinds, 39% of Gen Z respondents and 35% of millennials plan to apply for a new credit card or refinance existing ones. The overall significance of credit access is underscored by the fact that 86% of Canadians view it as important, representing a seven-percentage-point increase from the previous year.


As Canadians navigate these tough economic times, the study indicates a multifaceted approach to financial management, encompassing reduced spending, increased savings, debt reduction, and a reliance on credit as a means of coping with the current economic climate. With uncertainties lingering, Canadians continue to adapt and make prudent financial choices in the face of these challenging circumstances.


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