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The debt affects the lives of the couple and the mental health

by

Alain Thériault

1 August 2018 11:30

Photo : Freepik

The debt and the interest rate increase has a detrimental effect on many Canadians, according to the Report of Manulife on debt and higher interest rates. A Source of stress for many people, the debt makes Canadians particularly averse to rising interest rates. Curiously, they do not prioritize them not to talk to their advisor or to make a financial plan.

Fort of 2003 responses of Canadians aged 20 to 69 years old interviewed in may, the survey conducted by Ipsos for the account of Manulife Bank revealed that the debt burden is causing the stress for 15 % of the respondents. In addition, 21 % believe that their current financial situation their would make it difficult to manage an unexpected expense.

 

Distress and insomnia

Their level of debt prevents 8 % of the participants of sleep, and has an impact on the mental health of 11 %. Among the participants, 15 % often feel overwhelmed by their financial situation, and the same proportion is concerned about the payment of their bills.

Participants in the survey of Manulife, 51 % have negative feelings regarding debt. These concentrate in es Canadians are very indebted, residents of the Prairies and of the tenants.

Tensions and cachoteries

Three Canadians are married or in a de facto union on ten are of the opinion that the debt is causing problems in their relationship. This proportion rises to 56 % among the highly indebted and 43% among those under 35 years of age. About one-third of the survey participants said to be heavily indebted or have a few debts.

 

Among those that speak about money with their spouse, half indicate that these conversations lead to always or sometimes tensions, or problems in their relationship. In the under 35 years, 34 % said that their spouse does not know how much is their debt, while 33 % of heavily indebted, have had that response.

A Canadian in debt in 10 said that it has completely hidden the cost of a major purchase to one of his close friends, and one in 10 claims to have lied about the cost of a purchase. Men are more likely to have completely hidden in the near the cost of a purchase. The majority of these purchases (63 %) were less than 1 000 $, but 8 % of men surveyed have hidden a purchase of a value equal to or greater than $15,000.

“In Quebec, talk about money seems to traditionally taboo, even within a couple, stressed Richard Payette, president and chief executive officer, Manulife Québec. Moreover, our survey reveals that nearly a quarter of Quebecers indebted countries have confessed to having hidden a major purchase to a loved one. It is almost 60% higher than the canadian average ! We must learn how to speak it and to have a frank and open discussion on these topics. “

 

Planning and advice : not a priority

If 54 % felt that priority in the next five years to reduce the amount of their debts, only 8% prioritize them to establish a financial plan during this period.

Among their other financial priorities for the next five years, the participants are only 4 % mention the need to find a financial advisor and deal with him. Only 3 % prioritize life insurance. In contrast, 37 % prioritize saving for retirement and 31 % in view of the holiday. In addition, 21 % admit that their level of debt has an impact on their ability to save for retirement.

“We want Canadians to feel able to make financial decisions, and a simple way to do this can be to speak with a financial advisor,” added Mr. Payette.

 

Rate increase

Two-thirds of Canadians (66 %) say they are concerned about a possible increase in interest rates, and two out of 10 indicated they were very concerned. Residents of Quebec are the least concerned about the rise in interest rates, 56 % of them. There is no great difference between the results of the other provinces. However, 16% of Quebecers say they have discussed with their financial advisor the impact of rising rates on their financial position, so that, on average, only 11 % of Canadians have done so.

If the interest rate increase continues (1 % or more), seven in 10 Canadians plan to take actions to mitigate. Among the main : 34 % will reduce the expenses of entertainment such as the cinema and the outputs in the bars ; 33 % will reduce spending in shopping and 32 % of the expenditures in luxury products such as holidays.

 

Station to the outstanding balances

Credit cards with an outstanding balance sits at the summit of the types of debt the most common for 55 per cent of Canadians who responded to the survey. Three-quarters (75 %) of the participants in the survey who have this type of debt be classified as ” heavily indebted “. Mortgages come in second with 43% of the respondents, the loan for car in third with 36 % and lines of credit in fourth with 32 %.

 

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