Single mom Celina Sinisalo says managing hers and her young daughter’s needs versus their wants is "a constant battle" on her limited income.
Receiving Employment Income Assistance (EIA), Manitoba’s welfare support, the monthly stipend is often not enough to last between cheques without Sinasalo resorting to the most costly form of debt: payday loans.
In turn, the high-interest, short-term loans erode her government supports’ buying power more and more with each loan.
But "they help us get through the month," explains the mother in her mid-20s.
The ongoing fight is draining. Every purchase, every day is measured by whether she truly needs it, including clothes and toys for her toddler.
"Being financially incapable to take care of my daughter along with myself creates (a lot of) stress."
Compounding problems, she now owes repayment on EIA and the CERB (Canada Emergency Response Benefit) after having received the federal pandemic support not initially realizing she was ineligible while receiving EIA.
Although most people don’t face as dire economic challenges as Sinisalo, many know the battle with debt all too well, particularly during the pandemic.
And a new survey by a licensed insolvency trustee firm Bromwich+Smith examining Canadians’ perceptions regarding debt shows a generational divide. It found older cohorts — 55-plus — are more likely to believe indebtedness is the result of a personal failing to manage "needs versus wants" when it comes to spending.
"In contrast, younger adults are more likely to say it could be the result of a lack of financial literacy," says Shawn Stack, an insolvency trustee with Bromwich+Smith in Calgary.
"What’s more, they note the impact of the pandemic is significantly more profound (economically) than for older Canadians".
In short, the survey reveals the older you are, the more likely you are to see indebtedness as a personal responsibility problem while younger generations are more likely to see debt as a fact of life.
As such taking on student loans, credit cards, car loans and massive mortgages are often inevitable.
"The reality is people end up in debt not because they cannot distinguish between wants and needs," Stack says. "It’s actually a result of situations often beyond their control."
Winnipeg debt counsellor Sandra Fry says she has helped individuals who span a spectrum of reasons for indebtedness.
"It happens at any age," says Fry, who works for the non-for-profit Credit Counselling Society. "With the 20-somethings, it really can be a want versus need issue… the buy now pay later attitude can be commonplace."
The source of their debt is often credit cards with interest rates 20 per cent or higher, creating "a snowball effect" to the point "they’re eventually using credit to buy groceries without the cash to actually pay for it."
But Fry adds life’s circumstances also frequently contribute to indebtedness — like divorce, illness and job loss — particularly for those in middle age.
For 25-year-old Kerilynn MacLennan, some of her debt has indeed been the result of money flowing a little too much on occasion toward ‘wants’ — those discretionary, unnecessary purchases.
But she is also paying down a student loan.
"It’s not like I’m buying a $400 purse," says MacLennan, a retail customer service representative in Winnipeg with a degree in commerce.
Her main financial challenge "is really just adjusting to the real world" and learning to match income with expenses.
Since graduating, MacLennan has strived to keep a lid on spending until her student loan is paid.
"I’m imagining to myself that, ‘Hey, once I pay this off, maybe I can get a brand-new car?’" she says, adding her current monthly payments are equivalent to those of a car loan.
MacLennan says more financial literacy for younger adults would be helpful to avoid money mistakes with credit cards. But ultimately, "we all learn from past mistakes and how to make sacrifices," she adds.
That said, licensed insolvency trustee Jasmine Marra with Bromwich+Smith in Toronto argues too much debt-shaming still goes on in society, and that isn’t helpful.
"When there is greater empathy and compassion for indebtedness, it allows people to reach out earlier, and that’s key because… in absence of advice, you often go down the wrong path," says Marra, who as a licensed insolvency trustee offers free consultations and is legislated to provide access to legal debt forgiveness measures, including bankruptcy and consumer proposals.
She adds many individuals are facing now not only mounting credit card bills and other debt. Several owe repayment and taxes on CERB too.
Marra further notes it’s important these individuals seek advice regarding this debt owed to the government because they may not have to repay it in full.
"If someone applied for these supports in distress, perhaps misunderstanding the guidance… then CERB may be forgivable."
That could be good news for Sinisalo, who had applied for CERB at the pandemic’s start after a job training program she had been enrolled in shut down.
"I’ve had some support with learning about money in the past, but not enough to succeed," she says. "Some of us are tired of being in debt and just want relief."