Four in 10 homeowners (39%) indicate they’re more comfortable with debt compared to their parents, versus just one in eight (13%) who feel less comfortable, according to a Manulife Bank of Canada poll.
The perceived gap in comfort level was greatest among homeowners in their fifties, who were five times more likely to indicate a greater degree of comfort than their parents, compared to those in their twenties and thirties, who were only twice as likely.
The survey suggests homeowners are also becoming more comfortable discussing debt within the household, with three in 10 (28%) indicating they communicate more than their parents, compared to just 8% who feel they communicate less. Once again, homeowners in their fifties were most likely to feel they differ from their parents. This group was five times as likely to feel they’re better communicators than their parents, compared to those in their twenties, who were only slightly more likely.
“Canadians are becoming increasingly comfortable with taking on debt and discussing that debt with those close to them,” says Jason Daly, VP product, marketing and business development, Manulife Bank of Canada. “This could be a result of our current low interest rate environment, which makes debt management seem less intimidating than it was in the ’80s and 90’s, when rates were much higher.”
The question of “what is debt?” also appears to be in flux. While almost half (45%) of homeowners surveyed would consider themselves to be debt-free even if they have mortgage debt outstanding, this varies significantly by age group. Two thirds of homeowners in their twenties (68%) don’t appear to include their mortgage when they think about their debt, compared to 60% of those in their 30’s, 48% of those in their 40’s and just 29% of those in their 50’s.
“This may reflect a difference in focus,” says Daly. “Younger homeowners are more likely to carry higher-interest consumer debt, which they’d be smart to focus on paying down. However those in their 40s and 50s may have already tackled their consumer debt and are becoming more focused on paying off their mortgage before retirement.”
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While many Canadian homeowners may feel that debt is a more normal part of their lives than it was for their parents, 38% feel they will have more difficulty becoming debt-free than their parents, compared to 23 percent who believe it will be easier.
And while many of us feel we’re more comfortable holding and discussing debt than our parents, the survey also suggests that our parents have a significant influence on our future success managing debt. In fact, homeowners who indicated their parents taught them a lot about debt management are twice as likely to report being in “great” or “good” shape with regards to their debt (67%) compared to those whose parents didn’t teach them anything about debt management (34%).
One finding that’s consistent across age groups is the desire to become debt-free. Overall nearly 80% of homeowners indicate that being or becoming debt-free is among their top financial priorities — ranging from 75% of those in their 20s to 84% of those in their 50s. And, by and large, homeowners seem to be comfortable with their progress toward this goal, with 86% of respondents who have debt indicating that they are either “doing OK”, “in good shape” or “in great shape”.