Briefing document -
The Debt Cause Tracker -
Shawn Stack

Briefing document | The Debt Cause Tracker | Shawn Stack

Narrative

As COVID-19 continues to heighten financial hardships for many Canadians, a new national survey by Licenced Insolvency Trustees, Bromwich+Smith examines how the country perceives debt and the factors that cause it. The Debt Cause Tracker, reveals a generational gap in perception on debt causes from wants vs needs, job loss and cost of living increases, to substance addiction, mental health and gambling.

The survey asked what people think are the key causes of going into debt. The top response for more than half of Canadians (52%) was “a difficulty distinguishing between wants vs needs” (essential purchases vs instant gratification such as impulse buys).

Other top responses include a lack of financial literacy (42%), costs of living increases (41%), unexpected financial emergencies such as a car accident, divorce, major health problem, a lawsuit or a natural disaster (40%), and job loss (36%).

Rounding out the list was social acceptance – spending in order to fit in (27%), marketing and the media (15%), substance addiction (10%), mental health problems (8%), and gambling (7%).

When comparing the findings amongst different age groups, nearly three-in-five of those 55+ (58%) believe wants vs needs is the main cause of debt, while only 44 per cent of younger respondents (18-34) think it’s a factor. For the younger cohort, a lack of financial literacy and budget planning skills is the main cause of going into debt at 50 per cent. This is in contrast to 34 per cent for the 35-54 age cohort and 43 per cent for those 55+.

Discuss The Debt Cause Tracker

Don’t worry about reciting numbers back to the media – talk about the poll from a high-level and use it to lead into key messages.

  • Based on your experience with yourself and others, what do you think are the top causes of people going into debt?
    • Wants vs needs – 52%
    • Lack of financial literacy/budget planning skills – 42%
    • Cost of living increases – 41%
    • Unexpected financial emergencies – 40%
    • Job loss – 36%
    • Social acceptance (spending to fit in) – 27%
    • Marketing and the media – 15%
    • Substance addiction – 9%
    • Mental health problems – 8%
    • Gambling debts – 7%
  • Generational gap when comparing the two age groups: 18-34 vs 55+
    • Wants vs needs – 44% vs 58%
    • Lack of financial literacy/budget planning skills – 50% vs 43%
    • Cost of living increases – 46% vs 34%
    • Unexpected financial emergencies – 43% vs 38%
    • Job loss – 37% vs 36%
    • Social acceptance (spending to fit in) – both 26%
    • Marketing and the media – 12% vs 18%
    • Substance addiction – 9% vs 7%
    • Mental health problems – 10% vs 7%
    • Gambling debts – 6% vs 8%

Key messages

  • Despite the considerable setbacks, the pandemic should be a teachable moment for everyone - many who thought they were financially stable have now experienced difficulties. It is critical that Canadians realize that, especially during these extraordinary times, it’s okay to reach out to professionals for financial and debt advice.
  • There is a common misconception that debt is a result of poor money management and spending habits. However, many Canadians find themselves in this situation due to factors outside of their control such as unexpected life events.
  • In the K-shaped recovery, where different parts of the economy recover at different rates, the most vulnerable cohort is being pushed even further down. Younger Canadians have felt a stronger impact amid the pandemic and tend to have a different understanding of the factors leading to debt, because they are living it.
  • Bromwich+Smith understands the many reasons why Canadians go into debt and will continue to provide support to those who are seeking effective debt relief solutions.

Offer advice on how people can get control of their finances

  • Getting a handle on your finances and putting a plan in place will help alleviate the anxiety, help calm your thoughts, and stop the creditors from calling.
  • Have productive, effective money conversations with loved ones. It will ease stress and make people more willing to seek appropriate help.
  • Don’t wait until it’s too late – the longer you wait, the more interest you’re accumulating.
  • Seek help from a debt professional. Our role is to assist clients with debt solutions, even if they don’t need to go bankrupt or file a consumer proposal. 

Call to action

  • Give Bromwich+Smith a call
  • Head to bromwichandsmith.com

Potential questions

  • Walk me through The Debt Cause Tracker. What stands out to you?
  • Why is the older generation more likely to believe wants vs needs is a main cause of debt, compared to the younger cohort?
  • Based on what you see with your clients, what are some of the top causes of debt?
  • Can you explain the K-shaped recovery? How has it impacted the younger generation?
  • How has the pandemic changed Canadians’ perceptions on money and debt?
  • What advice can you offer to those who are struggling with debt?
  • Why did Bromwich+Smith conduct the survey?
  • What is Bromwich+Smith?
  • Where can our audience go to find out more?
  • Anything you’d like to add?