Millennials Stand Out as Being More Cautious About Their Personal Finances During COVID-19
Equifax Canada collaborates with BEworks to analyze consumer behaviour
Equifax Canada analytic data and a recent consumer survey indicates that younger adults (18-34) stand out as being more cautious and concerned about their financial future in the face of the COVID-19 economic crisis.
Equifax data analytics confirms that, with reduced opportunity for discretionary spending, younger adults have seen a higher rate of decline in credit card balances since January at 16 per cent as compared to under 12.6 per cent for those adults 35 and older. Analysis also confirms that payment deferrals are being used more frequently in younger groups with Under-24 and those 25-34 having 6.73 per cent and 6.69 per cent accounts deferred respectively. This contrasts with 5.2 per cent for the 45-54 cohort.
To better understand consumers today and for the future as the economy and businesses reopen, Equifax Canada is teaming up with BEworks, experts in behavioral economics. After examining the consumer confidence data and survey research, Kelly Peters, CEO & Co-Founder of BEworks, suggests that younger adults in particular are less susceptible to the scarcity mindset driving other consumers.
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“COVID-19 has created the perfect storm for Canadians to experience a scarcity mindset. A feeling of not having enough, be it time, money, or social companionship can exert a toll by taking mental energy away from financial decision-making and making it more likely for cognitive biases like loss aversion and present bias to drive financial behaviours,” said Peters. “Despite these challenges, there are psychological silver linings to the pandemic, including that for many Canadians new and different financial behaviors have emerged, and old habits have loosened their grip for a time. By proactively leveraging behavioural insights, financial Institutions can take advantage of the unique times we are living in and help consumers make a fresh start in the post-pandemic world.”
Millennials and their financial concerns about COVID-19
|% Who Agree with Survey Statements||Millennials (18-34)||35 and Older Respondents|
|My job feels less secure because of COVID-19||42 per cent||25 per cent|
|I’m limiting my spending because I’m already carrying too much debt||41 per cent||32 per cent|
|I will apply for an additional credit card to help pay my bills||13 per cent||5 per cent|
|I’m concerned about my ability to keep up with my rent/mortgage payments||30 per cent||17 per cent|
|I may need to move because I cannot keep up my rent/mortgage payments||14 per cent||7 per cent|
|The government assistance I’m receiving won’t be enough to cover all of my bills||25 per cent||18 per cent|
|I will need to turn to friends and family for money||20 per cent||9 per cent|
Looking across all age groups, understandably survey respondents are most concerned for their own financial situation, but there’s also a good measure of concern for their friends, country and family dealing with the pandemic that has gripped the world. Nearly four-in-ten (37 per cent) are concerned about their own financial situation, while 33 per cent are concerned about the financial impact on their country, 26 per cent are concerned about their children, 21 per cent are concerned about their parents and 17 per cent are worried about their friends.
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“Anxiety over finances is something not limited to the COVID period as we saw in a survey last fall indicating that 45 per cent of millennials felt concerned about their current debt levels as did 49 per cent of those aged 35 to 44. What is encouraging in this research is that we see that Canadians are turning to friends and family to discuss and share approaches to finances and offer support during difficult times,” said Carrie Russell, President of Equifax Canada. “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. At a time when we are physically farther apart, the pandemic has in a way brought us closer together, with a sense of optimism, support and resiliency.”
Nearly half of survey respondents (47 per cent) expressed optimism in saying that, “I’m confident my personal household finances will stabilize in the next six months.” Nearly three-in-ten of those surveyed disagreed with this statement and one-quarter were unsure. Those in B.C. are more likely to say they agree (54 per cent) with this statement compared to those in the Prairies (46 per cent), Ontario (45 per cent), and the Atlantic provinces (39 per cent).
Tracking expenses and understanding credit
When asked about their expenses 20 per cent of those surveyed said that the government assistance that they were receiving wasn’t enough to cover their bills. People are cutting back too; 20 per cent indicated that they have cut back on digital subscriptions like Netflix, Amazon Prime and Spotify. Looking ahead to when stay-at-home restrictions are lifted, 11 per cent said they won’t be able to afford the fees for their kids to play sports or take part in extracurricular activities.
In asking about their thoughts and feelings about credit, 69 per cent of all survey respondents indicated that they feel comfortable talking about credit, whereas 31 per cent feel stressed talking about credit. With respect to credit scores, 72 per cent indicated they understand that their credit scores impact them financially, while 28 per cent also said there was a social impact. On the matter of checking credit scores, 60 per cent appreciate the importance of routinely checking credit scores versus 40 per cent who indicated it’s more important to check scores when receiving a credit monitoring alert.