Financial uncertainty related to COVID-19 appears to be weighing more heavily on younger households than other homeowners and renters. A significant percentage of respondents aged 18 to 34 reported concerns about their ability to pay accommodation costs when Equifax Canada recently posed questions about financial resources and spending behaviour to nearly 1,540 Canadians. Millennials were also more likely to worry about job insecurity and to seek additional credit or family support to help cover their expenses.
Thirty per cent of millennials expressed concerns about continuing to meet rent or mortgage obligations and 14 per cent indicated they might have to move out of their current accommodations for that reason. Among respondents aged 35 or older, 17 per cent reported anxiety about their ongoing ability to pay rent or mortgage and seven per cent conceded they might have to move.
Job security was a standout concern for all respondents with 42 per cent of millennials and 25 per cent of older respondents reporting that their employment feels less stable due to COVID-19. Among those who have experienced job loss or a reduction of working hours, 25 per cent of millennials report that government assistance programs provide inadequate income to cover their expenses, versus 18 per cent of older respondents.
Five per cent of older respondents said they would apply for another credit card and nine per cent expect they will need to turn to family or friends for supplementary funds. Millennials were more likely to consider both those steps, with 13 per cent reporting they would apply for another credit card and 20 per cent expecting to receive financial support from family or friends.
Meanwhile, Equifax Canada analytics reveal that millennials’ credit card balances have shrunk by 16 per cent since January — a steeper drop than the collective 12.5 per cent reduction in other cardholders’ balances. That’s largely attributed to fewer opportunities for discretionary spending.
“There are psychological silver linings to the pandemic, including that for many Canadians, new and different financial behaviours have emerged and old habits have loosened their grip for a time,” suggests Kelly Peters, chief executive officer of the economics and behavioural analytics firm, BEworks.
However, a higher percentage of younger cohorts — under the age of 25 and 25 to 34 — have deferred payments.
“We know that some people are facing greater hardship than others, driven by large household indebtedness and historically low savings rates. It’s important for people to have meaningful conversations about money, expenses, deferrals and payment plans,” asserts Carrie Russell, president of Equifax Canada.