Canadians are not budgeting for their mortgage payment.. and it's scary

Most Canadians are concerned about meeting their monthly expenses but are strangely not budgeting for one of their largest, their mortgage. 

This is according to a recent survey conducted by IG wealth management in partnership with Pollara Strategic Insights. The survey found that only 39% of Canadians include their mortgage in their monthly budget. This could be because it is a fixed monthly cost rather than a variable expense for many. 

The survey found that most Canadians budget their monthly expenses, with 67% of those surveyed saying they found budgeting helpful in managing their cash flow. A total of 1590 adults were surveyed between July 28 and August 8. The most common expenses budgeted were groceries (90%), gas (72%), and entertainment and savings (54% each). 

Alana Riley, head of mortgage, insurance, and banking at IG Wealth Management, said in a press release that it was encouraging to see many people having a budget but that not factoring in a mortgage payment does not paint an accurate picture: 

"In many cases, monthly mortgage payments, along with taxes, account for one of the largest monthly expenses Canadians face. So, while it is encouraging that so many reported having a monthly budget, it's only providing a partial snapshot of their overall cashflow situation if they don't factor in their mortgage.” 

For those Canadians who carry mortgages, they account for approximately 35% of their monthly expenses. 

The survey also found that Canadians are less optimistic about their financial affairs, with approximately 43% unsure if they will be able to cover all their monthly expenses and 60% of those surveyed considering cutting costs to reduce their monthly expense. Additionally, only 45% of respondents believe they will be debt free when they retire. 

"The combination of rising interest rates and inflation is causing stress for many Canadians and, in some cases, tense dinner table conversations across the country," stated Alana Riley. 

"Canadian families are wrestling with questions such as should they go with a fixed or variable rate mortgage, how can they more effectively manage their money, and what can they do to set themselves up for the future, whether it be their retirement, the purchase of a home or paying for their children's education.” 

Inflation and rising interest rates continue to squeeze many Canadians, but with proper budgeting and careful thought, these challenges can be navigated more effectively.