Facing an affordability crisis, Canadians are cutting back on spending and considering taking on extra work to pay down debt.
That's according to a BDO's Affordability Index survey of 1,549 Canadians conducted by Leger between April 14 and April 16.
A majority of Canadians are cutting back on spending as inflation and rising interest rates continue to put pressure on household budgets. The survey found that more than half of Canadians (56 per cent) are cutting back on non-essential spending on things like vacations and restaurant visits in order to make debt payments. Another 43 per cent say they are cutting back on essential spending for items like food, clothing and utilities in order to pay down debt.
The survey also found that 26 per cent would consider taking on extra work to pay down debt, while 30 per cent are overwhelmed by their debt load and "don't know what to do about it."
The percentage of those overwhelmed by debt is lower for Canadians over the age of 55 (13 per cent) and the highest for younger Canadians between the ages of 18 and 34 (45 per cent) and those living in Alberta (37 per cent).
Canada has the highest level of household debt among G7 nations, according to an analysis published by Canada Mortgage Housing Corp. deputy chief economist Aled ad Iorwerth this week. Mortgages make up three-quarters of household debt in Canada, ad Iorwerth says, and rapidly rising interest rates have led to "early warning signs that more and more consumers are getting into financial difficulties."
"Reducing your debt burden is one of the best ways to cope with the affordability crisis," Nancy Snedden, a licensed insolvency trustee and president of BDO Debt Solutions, said in a statement. Still, while many Canadians are facing high debt levels, Snedden notes that it is still considered a taboo subject for many and not discussed with friends and family.
"It's why we strongly encourage people to explore their debt relief options," Snedden said.
"Many households have already cut back as much as they can on their expenses, and not everyone has the time, ability or capacity to take on extra work."
The survey found that one-quarter of younger Canadians (between the ages of 18 and 24) have already taken on part-time work to cope with inflation.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.