Households cut spending and delay saving while inflation and borrowing costs stay high
Canadians are cutting spending, avoiding restaurants and scaling back retirement contributions, even as some debt indicators improve — a combination that points to rising advice needs heading into 2026.
According to the latest MNP Consumer Debt Index, conducted quarterly by Ipsos, 71 percent of Canadians expect the cost of living to worsen this year, and 59 percent believe the overall economy will deteriorate.
MNP also reports that 59 percent expect housing affordability to decline, while many anticipate more pressure from interest rates, inflation and the job market.
MNP president Grant Bazian says there is “a widespread sense that household finances will come under increasing pressure,” and that Canadians expect most aspects of daily life to worsen rather than improve in 2026.
Despite that pessimism, MNP says its index rose one point last quarter to 87, marking the first time it has improved in December.
The firm reports that 41 percent of Canadians are within $200 of not being able to pay their bills each month, down seven points and the lowest level in the post-pandemic period, while the average amount left after expenses has climbed to $907.
Fewer than half, though, have six months’ worth of emergency savings, leaving many households vulnerable to shocks.
Debt and rate anxiety remain elevated.
MNP reports that nearly two in three Canadians say they urgently need interest rates to come down.
Almost half remain concerned about their ability to repay debt, and more than two in five fear that a future rate hike could push them toward bankruptcy.
Bazian says heavily indebted households face “little room for error” as they move into 2026.
Several surveys point to broad-based belt-tightening.
The Financial Post reports that more than 80 percent of Canadians in a TransUnion survey cited inflation as their top concern at the end of 2025, and 53 percent said their income is not keeping up with rising prices.
More than 70 percent expect the cost of living to worsen this year, according to that coverage of the MNP and TransUnion data.
TransUnion also found that only 15 percent of respondents had not changed their spending habits, with most chasing discounts, shopping at cheaper retailers and cutting discretionary spending such as dining out, travel and entertainment.
Toronto-Dominion Bank, in a separate survey, reported “significant shifts” in financial priorities. TD found that two-thirds of Canadians plan to make spending cuts, up from 51 percent last year, and almost 60 percent intend to trim their monthly budgets by up to $1,000.
TD also reported that 70 percent now cite inflation and the rising cost of living as their biggest financial challenge going into 2026, up from 49 percent a year earlier.
Restaurant trends highlight how affordability pressures are playing out day-to-day.
BNN Bloomberg reports that falling fast-food prices are emerging as a signal of growing stress, as consumers trade down and seek more predictable options.
The Financial Post reports that McDonald’s Canada has cut its McValue meal price to $5 from $5.99 and frozen the price of a small coffee at $1 for at least a year, while complaints about rising fast-food costs have pushed Tim Hortons, Wendy’s and Burger King to roll out deals.
In an interview with BNN Bloomberg, Matt Triemstra, vice-president of federal affairs at Restaurants Canada, said polling shows 75 percent of Canadians plan to dine out less because of the cost of living.
He described a “perfect storm” of food inflation, higher labour costs and weaker demand, and said about 41 percent of restaurants report operating at break-even or at a loss, up from roughly 12 percent three years ago.
He also pointed to forecasts of as many as 4,000 restaurant closures across the country, and said Restaurants Canada’s data align with that expectation.
How Canadians respond to this stress varies.
MNP reports that nearly three in five are in “fight” mode — adjusting budgets, consolidating debt or seeking advice from a financial professional.
Almost one-third, however, show “flight” behaviours such as avoiding bills, avoiding conversations about money or leaning on credit to cover essentials, while 15 percent feel financially frozen and unsure where to start.
MNP’s data show younger adults aged 18 to 34 are especially prone to avoidance and paralysis, and lower-income Canadians are more likely to pull back on restaurant spending altogether.
Despite high stress, professional help remains underused.
MNP says just over one in 10 Canadians have sought advice from a financial professional when facing financial strain.
A recent alert from the Office of the Superintendent of Bankruptcy and the Canadian Association of Insolvency and Restructuring Professionals warned that stress and stigma are stopping many people from seeking help.
It noted that this is keeping them from accessing regulated guidance from Licensed Insolvency Trustees, the only federally regulated professionals authorised to administer government‑regulated debt solutions such as consumer proposals and bankruptcies.
Longer-term planning is also feeling the pressure.
The Financial Post reports that almost 20 percent of Canadians in the TransUnion study expect to reduce contributions to retirement funds or investments over the next three months, as more households prioritise essentials.
At the same time, 53 percent say they worry about saving enough for retirement over the next three to five years — a gap that underscores the opportunity, and challenge, for advisers working with clients whose financial margin for error is shrinking.
