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Canadian spending trends, COVID-19, and you

6 min read

COVID-19 Spending Trends & You

Written By

Veronica Ott

Rounding it up

  • In the last 10 years, Canada has seen some interesting spending trends—debt, insolvency rates, and the cost of essentials have all increased.

  • Despite the elevated cost of living, Canadians continue to spend on luxuries, like travel.

  • No one knows what the future holds, but it is expected that COVID-19 will continue to further drive up costs of living in Canada.

  • By understanding the Canadian economic landscape, you can make more informed decisions.

Over the last decade, Canada has seen some interesting spending trends. While we’d normally refer to historic trends to predict what our financial future looks like, the COVID-19 pandemic makes it difficult to do so this year. Fortunately, by understanding Canada’s economic landscape, you can make more informed decisions as an individual or household. Let’s start by looking at spending trends over the past 10 years:


In the last 10 years, Canadians have acquired a massive amount of household debt. The debt on its own is troublesome, but what’s worse is the increasing cost of servicing it. As the cost of carrying debt increases, more and more people are nearing financial hardship.

The ratio of household debt to disposable income is over 155% in Canada. While not a drastic departure from the 2010 ratio of nearly 150%, it doesn’t mean Canadians aren’t struggling. Because the household debt to disposable income ratio is so high, more individuals are having to choose among various financial goals, such as paying off debt, saving, or necessities of life.

The primary driver of this debt is home equity lines of credit (HELOCs). In January 2020, the total amount of HELOC debt in Canada totalled a whopping $268 billion. With the boom of the Canadian housing market, it was easier to borrow using home equity as security. However, the debt wasn’t employed responsibly, often used to finance everyday expenditures. Now, many are having trouble repaying this debt, as they would be close to a financial crisis if their monthly monetary obligations were to increase by as little as $100.

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After the 2008 financial crisis, almost 160,000 Canadians filed for insolvency, either in the form of a bankruptcy or a consumer proposal. In 2019, the number almost reached the same peak at 127,000. The rise in insolvencies is mainly due to overwhelming debt acquired over many years.

When people hear this data, they often want to shift blame to younger generations (think millennials-are-wasting-their-money-on-avocado-toasts headlines). However, data shows that no particular age group has a higher amount of insolvencies. The burden has been split among all age groups equally. In addition, an increasing number of Canadians are filing for insolvency numerous times, as opposed to just once.


Both rent and homeownership costs have significantly risen in Canada, particularly in large cities. Over the last 10 years, the portion of income spent on housing has shot up by 10%.

Unfortunately, the increasing cost of housing is also increasing the gap between the haves and the have nots. Individuals who invested in the housing market experienced massive financial gains. But for those who did or could not, they missed out on the opportunity and have an even harder time buying a home now.


In the last 10 years, the percentage of household income spent on food rose by 3% — and Canadians are noticing it. A 2019 study showed that Canadians believe the increase in cost of food is outpacing that of their income. The numbers back this belief; in 2010, Canadian households spent a yearly average of $5,588 on groceries. In 2020, that amount doubled to $12,667.

For this reason, more Canadians are changing their spending habits in relation to food; strategies include eating out less and buying in bulk. They’re also eating less meat, as certain foods, like meat and seafood, are increasing at a faster rate than others.

Rising grocery bills also means Canadians, particularly of younger generations, are spending an increasing amount on dining out, since it costs similarly to cooking at home. Meal kits have also become extremely trendy because they offer a hybrid between ordering in and cooking at home.

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Despite the increase in costs of housing, food, education, and other necessities of life, Canadians continue to indulge in certain luxuries. One of these luxuries is travel, because many want to escape Canada’s harsh winters; so much so that in 2017, Canada ranked sixth globally in terms of travel and tourism expenditures.

Canadians carrying debt are not exempt from indulging in travel. The rationale being that they may never own a home or pay off their student loans, so they may as well have some fun and go on vacation. Can you blame them?

How will spending trends change with COVID-19?

While no one knows for certain what will happen in the next few years, experts have forecasted that COVID-19 will bring about a number of changes to spending and the economic landscape including:


Many may expect that debt increased since the beginning of COVID-19 pandemic started. In fact, the opposite is true. By August 2020, Canadians reported that their aggregate debt decreased, including lines of credit and credit cards. At the end of July, Canada decreased its debt by roughly $11 billion.

This was possible because of massive government financial aid and loan deferral programs. It is assumed that many Canadians foresaw financial stress due to the COVID-19 pandemic and began to pay down debt and spend less to prepare for the worse. However, now that government funding programs are coming to a close, many may return to debt to make ends meet, landing Canada in the same predicament.


Because of the massive amount of debt Canadians are carrying around, a small increase in financial obligations could tip people over to insolvency. In 2019, 53% of Canadians reported that they would face financial difficulty if their pay cheques were delayed by even one week.

With the financial uncertainty surrounding COVID-19, more and more Canadians could face insolvency. This is especially true for individuals facing job loss or reduced hours, or are having trouble finding new employment. While Canada recovered 55% of jobs lost from the first wave of COVID-19, the second and third waves can cause longer lasting repercussions.

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As a result of the pandemic, many Canadians lost their jobs. Those fortunate enough to still be working may be doing so from home. For these reasons, many families, particularly young families, have fled urban areas for greener, more spacious, and more affordable regions. Even with the COVID-19 vaccine in sight, the pandemic and remote working situation have caused many Canadians to reconsider their long term housing situation.

The pandemic has also pushed us into a renter’s market. When COVID-19 started, experts thought the housing market would become depressed, specifically in big cities like Toronto, Montreal, and Vancouver. However, the opposite came true. Housing prices and sales have remained steady throughout the pandemic, likely due to ongoing relocation.


With mandatory lockdowns, restaurants have been forced to close their doors and only provide take-out or delivery. Naturally, these restrictions forced more to cook at home (it’s expensive to UberEats every day!). Even if restaurants open up again in the near future, people may be hesitant to go, as many perceive dining out as risky or irresponsible. Some experts forecast that this trend will cut dining out expenditures by half for most Canadians.

It’s not just restaurants who have been impacted by COVID-19; sadly, the food and grocery supply chains have been affected too. For example, rice, wheat, and meat costs have steadily increased since the beginning of the pandemic. In addition, since much of Canada’s produce comes from the United States and Mexico, a weaker Canadian dollar and supply chain implications could result in even higher prices for Canadians.

How Canadian spending trends may affect you

Overall, uncertainty has seized the economic landscape of Canada with no end in sight. At the moment, much of the Canadian economy is under construction. Certain costs may increase which could impact an individual’s budget, lifestyle, and financial future significantly.

With such high levels of ambiguity, Canadians must take control of their finances and prepare for the worst. Consider building an emergency fund, paying down debt, and relocating to somewhere more financially beneficial for you.

Every cloud has a silver lining — even though COVID-19 has been extremely stressful for many Canadians, its accompanying changes could bring new (and favourable) opportunities.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!


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