Canadians need help now to navigate the ballooning affordability crisis

Susanna* is the sole breadwinner in her family but has been ill and unable to work. With few paid sick days, the resulting drop in her earnings has left her without enough money to cover her family’s expenses in the face of rapidly rising costs for food and other necessities. As a result, she has fallen behind on her rent and turned to payday and other high-interest loans to help make ends meet but her debt has now ballooned. Her creditors are deducting payments directly from her bank account, leaving her without money to buy food or pay her back rent. Susanna believes she and her family will be evicted.  

Susanna is not alone. She is one of millions of Canadians battling inflation, high interest rates, mounting debt and dwindling savings in the aftermath of the pandemic. Hardship, hunger and housing insecurity are spreading through our communities, together with rising rates of financial vulnerability that are eroding Canadians’ quality of life, wellbeing and confidence in their future.  

According to the Angus Reid Institute, one in three Canadians say they’re now in either “terrible” or “bad” shape financially. Among these two groups, 94 per cent and 80 per cent respectively say it is difficult to feed their household.  More generally, 67 per cent of Canadians have cut back on their discretionary spending, but 40 per cent have also had to draw down on their savings, 35 per cent have had to defer RRSP or TFSA contributions, 13 per cent are borrowing from friends and family, and 8 per cent have taken out a bank loan to make ends meet. 

Struggling Canadians need access to expert hands-on help to assess their financial situation, quickly identify measures to help them stabilize, and then build a longer-term plan to restore their financial health and resilience. Evidence tells us that access to relevant, high quality financial help and advice is associated with greater financial health and resilience, but an increasing number of Canadians cannot afford professional financial help and Canadians with low incomes are frequently unable to access the types of help they need to build their financial capability, maximize their incomes, tackle urgent financial problems, and set and pursue financial goals. Without this help, insolvencies, evictions, hunger, and hardship will only continue to grow at a terrible cost to households and our economy overall. 

While it’s tempting to think of this as a short-term crisis and to simply offer Canadians temporary financial relief measures while we wait it out, this would be a big mistake. We need more comprehensive, long-term solutions that provide urgently needed help to struggling Canadians now, but also address the chronic market gap in affordable and trustworthy financial help for these households and help them to build their longer-term resilience against future economic shocks.  

Other national governments are investing in community financial help services to fill a similar need for their citizens and we need to do the same. National governments in the UK, Australia and New Zealand have all invested heavily in community-based financial help services aimed at enabling people to successfully navigate their tax and benefit programs, tackle debt, and better manage their money. While their service models and funding mechanisms vary, they all offer free and trustworthy financial help to financially struggling individuals when they need it.  

Canada has its own proven service model for delivering free financial help tailored to the needs of underserved Canadians, thanks to large-scale federally and Ontario-funded pilot programs. From 2016 to date, 14 non-profit Financial Empowerment Champion organizations, selected through competitive public processes, have been delivering a suite of free financial help services to people in their communities, as well as piloting innovative approaches to serve rural, remote and Indigenous communities. Their services currently include tax filing assistance, help to navigate and access income benefits, and financial coaching to solve urgent problems and build action plans to achieve financial goals. 

Luckily for Susanna, she has a Financial Empowerment Champion organization in her community – Thunder Bay Counselling. Referred by a local insolvency trustee, Susanna met with a financial counsellor who quickly helped her to assess her situation and to access some immediate financial help resources. They also discussed stopping the automatic withdrawal of loan payments from her bank account. A few days later, Susanna reported to her counsellor that she had been able to buy groceries and pay off her back rent, successfully avoiding eviction. She also had a meeting scheduled with the insolvency trustee to address her outstanding debts. Susanna and her counsellor agreed to tackle her budget next and to put in place a longer-term plan to help her manage her rent, support her family, and use debt wisely going forward. 

Since January 2016, Prosper Canada and its 14 Financial Empowerment Champion partners have helped over 1 million individuals to improve their financial stability and health: 

• Supporting 414,000+ people with online financial information, education and planning tools 
• Boosting the incomes of 340,000+ individuals by $1.2 billion through tax and benefit help 
• Engaging 209,000+ individuals in financial education 
• Providing 60,000+ people with financial coaching  
• Training 14,000+ community financial educators and 350+ financial coaches  

Independent evaluations have shown that services delivered by Financial Empowerment Champion organizations are needed, relevant, efficient and effective in helping participants to achieve financial outcomes and reduce financial stress. Most importantly, 96 per cent of surveyed respondents said they would recommend these services to others. 

These services also address a key priority of Canada’s National Financial Literacy Strategy – enhancing access to affordable and trustworthy financial help. Despite this, they are precariously funded and unevenly distributed across Canada. Thanks to our caring and committed supporters and community partners, we have been able to sustain services but not to keep up with growing demand or to expand their reach to more regions across the country.  To do this, we need sustained and scaled national investment. 

Every Canadian who is financially struggling deserves the same chance Susanna had – to talk to an empathetic expert who can help them to stabilize financially and begin to rebuild their financial health and resilience. 

Community financial help services are a proven, cost-effective, solution and the lifeline many struggling Canadians need right now to weather this crisis, so what are waiting for?  

It’s time for the federal government to invest in scaling these services nationally so that every Canadian has access to the financial help they need to weather this crisis and to build a strong financial foundation.  

Our futures depend on it.

*Name changed for privacy