Have you ever wondered how much debt is normal to have at your age?
This text is a translation of a article CTV News contributor Christoher Liew.
Below are the average and median debt by age in Canada so you can compare your financial situation. There are also several reasons why the debts of Canadians keep growing.
Average debt by age group in Canada
From the outset, it is normal to have debts. Very few Canadians have no debt. Even those with near-perfect credit scores most likely have a car payment or student debt.
These data were measured by Statistics Canada.
Here is the average debt by age group in 2019:
- Under 35: $69,500
- 35 to 44: $105,100
- 45 to 54: $130,100
- 55 to 64: $80,600
- 65 and over: $49,900
Note — These data refer to individuals who are not in an economic family. The figures are different for these families, which include married or civil union couples with dependent children..
The total debt calculation includes:
- Mortgages
- Lines of credit
- Credit card
- Student debt
- Car loans
- Others
Median debt by age group in Canada
Analyzing the debt average offers some insights. However, the averages are skewed by data from the ultra-rich.
When calculating the average, all the data is added together and then divided by the total number of data. It is for this reason that extreme data can have a significant effect on the result.
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On the other hand, the median represents the middle value of a group of data when they are organized in order. In other words, the median is less influenced by outliers and more closely approximates typical values.
For example, a multi-millionaire with a $2 million mortgage will influence the average more than the average Canadian.
For a more accurate look at Canadians’ debt, here is the 2019 median:
- Under 35: $19,000
- 35 to 44: $35,200
- 45 to 54: $55,000
- 55 to 64: $30,000
- 65 and over: $10,000
Why is the debt of Canadians increasing?
Since last year, the debt of Canadians has increased considerably. And that’s especially true for credit card debt. Average monthly credit card spending rose 17.5% in the first few months of 2022, compared to the previous year, according to Equifax Canada.
In her report, the vice president of advanced analytics at Equifax Canada, said Gen Z and millennials are driving up consumer spending.
Inflation
Despite the fact that inflation seems to be slowing down, it is still relatively high. Inflation has raised the cost of living, especially at the grocery store and at the pump. As a result, Canadians are spending more per month than they were spending before 2022.
Unfortunately, wages have not kept pace with inflation. Canadians therefore have less money to spend each month, increasing the use of credit cards to meet all needs.
Voyage
After the lifting of COVID-19 restrictions, it’s normal to see Canadians eager to travel, even if they do so in exchange for more debt on their credit cards.
Rising interest rates
To keep inflation under control, the Bank of Canada has constantly increased the key rate during 2022 and is considering doing so again in 2023. When the key rate increases, variable rate debt, such as that of several companies credit cards are also increasing.
Those who accumulate such debt from month to month now have to pay even more interest, thus increasing their total debt.
Make a plan to manage your debt
Rising debt over a short period of time seems inevitable due to rising interest rates and inflation. However, it is important to have a plan to keep the situation under control.
A budget and regular actions are the best way to get out of debt.
It’s time to review your monthly budget to find places where you can save money, pay off debts with the highest interest rate as quickly as possible, and consider a second source of income.
