Canadians Show Signs of Financial Improvement but Continue to Feel the Cost-of-Living Squeeze: TransUnion Canada Study

The study indicates a notable shift in sentiment among Canadians, with 45% of respondents expressing optimism about their household finances over the next 12 months. This figure represents an encouraging increase in financial confidence compared to previous years. However, the study also underscores that many households remain financially strained, as half of the participants (50%) reported that their incomes are not keeping pace with inflation. Inflation has emerged as a pressing concern, with 86% of those surveyed identifying it as one of their top three financial worries.

Despite the financial challenges, the survey reveals some positive trends in Canadians' financial health. One-quarter (25%) of participants reported an increase in household income over the past three months, and 24% indicated that their financial situation is better than they had anticipated this year—the highest level recorded in the past year. Matt Fabian, Senior Director of Financial Services Research and Consulting at TransUnion Canada, commented on this development, stating, "Many Canadians are beginning to see improvements in their financial outlook and have adapted to sustained periods of economic uncertainty."

Though there are signs of financial recovery, Canadians are making intentional choices about their spending. The survey findings reveal that consumers are prioritizing essential expenses while being selective about discretionary purchases. Key statistics from the survey include:

The study indicates that Canadians have not significantly retreated from the credit market despite the cost-of-living pressures. About 25% of respondents plan to apply for new credit or refinance existing credit within the next year, a figure that has remained stable compared to the previous year. Younger Canadians, particularly Gen Z and Millennials, are leading this trend, with 48% and 37% planning to seek new credit, respectively. Credit cards continue to be the most favored borrowing product, with nearly 49% of prospective borrowers intending to apply for a new credit card.

However, the survey also highlights a cautious attitude towards borrowing. Approximately 21% of Canadians considered applying for new credit but ultimately decided against it. The primary reasons for this caution included the perception that they did not need additional credit (29%) and concerns about the cost of credit (26%).

As financial fraud and data breaches become more prevalent, Canadians are increasingly proactive in managing their financial health. The survey found that 44% of respondents were targeted by fraud attempts in the past three months but did not fall victim. Additionally, 20% reported being notified of a data breach affecting their information.

In response to these threats, credit monitoring has become a common practice, with 40% of consumers checking their credit reports at least monthly—an increase from the previous year. However, despite this heightened awareness, a significant portion of the population still lacks knowledge about how to effectively address cybersecurity concerns, with one-third of respondents taking no action and over half expressing uncertainty about the steps to take.

The latest TransUnion Canada study illustrates a nuanced financial landscape where signs of improvement coexist with persistent challenges. While many Canadians are regaining confidence in their financial futures, the pressures of inflation and rising costs continue to shape their spending and borrowing behaviors. As they navigate this complex environment, it is clear that affordability remains a critical lens through which Canadians approach their financial decisions.