In B.C., only a minority say they have enough cash for a ‘rainy day’: survey
Most British Columbians are confident they’d be able to cover their living expenses for next year without taking on more debt.
Unless something were to happen. Then West Coasters don’t seem as upbeat about their finances.
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That’s according to a survey released by MNP Debt on Tuesday.
It found that, while 57 per cent of B.C. residents don’t feel they’ll have to take on more debt for household costs next year, far fewer appear confident about unexpected expenses.
Thirty-three per cent were confident that they wouldn’t have to take on more debt in the event of a divorce, while 24 per cent said they could cope with car repairs or purchases without borrowing more money.
Meanwhile, 23 per cent were confident they wouldn’t need to pile on more debt if they had a death in the family; 24 per cent could avoid accruing more debt in the event of a job loss; and 27 per cent said they could avoid owing more in the event of having to take three months off work due to a sickness.
The results of the survey were “very surprising” for Judy Scott, an insolvency trustee with MNP Debt.
She told Global News on Wednesday that many people “don’t really have any idea of what the demands will be on them” if there were a sudden change that affected their finances.
“The percentages we’re seeing here show some optimism or lack of appreciation in terms of what that kind of event can do in terms of impacting people’s financial situation,” Scott said.
“I’m surprised that people aren’t necessarily aware of how big an impact that may be.”
But that wasn’t the only percentage suggesting that B.C. residents aren’t very confident about the state of their finances in the future.
Scott noted that, at 46 per cent, B.C. is “second from the bottom” when it comes to people who felt their debt situation would be better five years from now.
It beat only Atlantic Canada, where 45 per cent of people felt this way.
British Columbians feel this way because the cost of living in higher on the West Coast than it is in other provinces, Scott said.
That’s readily apparent when looking at the cost of housing alone.
RBC has estimated that paying down a mortgage in the Vancouver area would take up 79.7 per cent of household income, according to its most recent affordability index.
In Victoria, it’s 56.7 per cent; both are higher than the Canadian average of 45.9 per cent.
But housing isn’t the only factor contributing to household debt on the West Coast.
British Columbians carried an average of $23,522 in consumer debt in the first quarter of 2017.
It was the third-most of any Canadian province, behind Alberta ($27,871) and Saskatchewan ($24,462), according to an Equifax report from June.
However, B.C. also had the lowest 90-day delinquency rate, at 0.94 per cent.
How to prepare for a rainy day
Scott had a number of tips to help B.C. residents prepare for unexpected expenses.
One is to have three to six months of expenses saved.
Another is to cut down on expenses. She said it’s even possible to do this with housing, despite how much it costs on the West Coast.
“If you see that you’re going to continue struggling each month to cover your expenses, maybe you do need to consider making some more serious changes in terms of changing your housing,” Scott said.
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