Call Us!

(844) 845-4219

Financial Hardship – It’s Different This Time

Written by
Written by
Money Coach, AFCC

Lauren is a money coach dedicated to helping creative, variable earners cultivate a more joyful relationship with money. As an Accredited Financial Counsellor® Canada, she uses a shame-free approach to personal finance with a holistic view of the emotional, interpersonal, and strategic aspects of money relationships.

Lauren Canafranca
Financial hardship

Financial hardship has hit every generation. The current financial situation for Canadians is different than it has ever been before. It all began with the recession in 2008, then worsened by way of a global pandemic. Soaring costs, rising interest rates and stagnant wages have made getting by has become more difficult than ever.

How It’s Different


History is no stranger to financial hardship. The great depression left families with overwhelming distress and financial loss. The response was a dramatic decline in the use of credit products (which was only introduced in the 1920s). In the 90s large budget deficits and the persistent inflation of the 80s created a recession. Canadians saw a dramatic reduction in employment and Gross domestic product. The household debt-to-income ratio stayed relatively steady between 1990 and the end of 1991 at an average of 93.5%.

Since the recession of 2008, interest rates in Canada have been very low. So low in fact they did not surpass 2% until June of 2022. These low rates made borrowing money very cheap. Accordingly, these low rates influenced a dramatic rise in variable-rate mortgages. Canadians were also able to borrow against assets. Such affordable lending created steep increases in the cost of basic needs. The average home price in Canada in January 2023 is $714,700 with the average salary being $66,800. This means the average home costs more than 10 times the average salary. Previously housing cost approximately 4 times the average salary.

A Perfect Storm

Covid put a significant financial strain on many families. The Canadian government responded with social benefits like the Canada Emergency Response Benefit (CERB), the Canada Worker Lockdown Benefit (CWLB) and the Canada Recovery Benefit (CRB). This along with programs like mortgage deferral allowed Canadians to keep their homes, but they came with a price. The availability of money gave Canadians a false sense of security. Savings increased during the period of lockdown. As the world opened back up spending has skyrocketed producing record inflation.

Presently Canadian debt-to-income ratio ranks globally in the top 5 and the highest of the G7 at 184%. This is an average. There will be households with much less debt than this and there are also households with much more. In fact, some have a debt load several times their income. Canadians aged 35 to 44 have an average debt ratio of 238.7%. Household debt in Canada is now 107% of the nation’s Gross Domestic Product. This situation means Canadians are very vulnerable to increases in interest rates. Canada is positioned to repeat the 2008 recession.

The pandemic created a very unique economic situation. The two opposing forces that make up the economy, supply and demand, faced off to an extreme that doesn’t normally happen. Money was readily available. At the same time, there was reduced production due to supply chain and weather disruptions. In other words, people had money to spend, but nothing to spend it on. This created a dramatic increase in the cost of goods. Costs have not come down, even though savings fried up a while ago. Many have relied on debt to get by, leaving Canadians very vulnerable.

The current picture

Recently the Bank of Canada has made dramatic and consistent increases to their interest rate. This is meant to slow borrowing and therefore reduce inflation. The change has brought inflation down to 3.4% from 8.1% in June of 2022.

Despite this, the sharp increase in the cost of basic needs is still lingering:

  • The cost of food has increased dramatically reaching nearly 20% over the last year. Categories like fresh fruits, vegetables and wheat products have seen the highest increases.
  • Electricity cost reached an all-time high of 23 cents in regions of Canada causing utility bills to increase between 50-100%.
  • Between 73-80% of variable rate fixed payment mortgages have hit their trigger rate as of Jan 2023. This means the mortgage payment is entirely interest. In some cases interest is being added to the principle and equity is decreasing. 

With the cost of living so high Canadians are turning to credit cards to meet basic needs. However, there is hope on the horizon that this period of financial hardship will pass if we remain optimistic. In the meantime, Canadians need to set loving and firm boundaries with themselves regarding discretionary spending.

What Can We Do?

Be Financially Self-Compassionate

Acknowledge that things are hard right now. Give yourself the same advice you may give someone else. It is okay if you have to sell an asset that you aren’t using as much as you would like. It’s alright if you have to say no to some events. The priority is taking care of yourself so that your needs are being met.

Gain Perspective

Have a discussion with a financial counsellor or trusted advisor. This allows an opportunity to see if you are making mistakes, or if things are just hard right now. Financial stress impacts your performance in all areas of your life. Talking about your challenges will help you get your anxieties under control.

Make a Plan to Reduce Your Debt

Debt can have a significant impact on your quality of life and mental health. A debt management program to reduce your monthly payments could be the relief that you need.

Seek Social Supports

There are many supports available for those struggling financially. Check the eligibility criteria of social programs. Investigate the child care subsidy. Utilize your local food bank if you need assistance.

Connect With Your Values

Financial hardship can make it difficult to stay aligned with the things that matter the most to you. However, taking time to go through your expenses and identify what adds value can help. If you love to read, skip the streaming app and keep your unlimited ebook subscription or sign up for a library app.  Stay connected to the things that are important. It is a critical step in reducing your stress.


Do everything you can to save emergency funds. Having savings available can reduce overall stress and symptoms of anxiety and depression.

Find Creative Solutions

Exceptional circumstances require exceptional solutions. Consider changing your mortgage type. Look for higher-earning positions. Take extra hours at work, whatever it takes for you to create safety and a balanced budget.

Have you been scraping by by using credit cards? Struggling to keep up with payments now? Our expert credit counsellors can help you with a plan to get back on track. Get in touch today!

Share this page



Consolidated Credit Canada