Who Really Manages Household Debt?

Men and women have different opinions, suggests Manulife Bank survey.

According to Manulife Bank of Canada's recent debt survey, just over half of women (54 per cent) but only 39 per cent of men in two-adult households indicate that responsibility is equally shared when it comes to managing household debt.

In cases where respondents don't feel responsibility is equally shared, both men and women are far more likely to indicate that the responsibility lies with them rather than with their partner. Slightly over half (56 per cent) of men and a third of women (36 per cent) state that household debt is managed by "mostly me" or "only me." Conversely, only 10 per cent of women and four per cent of men indicate that household debt is managed by "mostly my partner" or "only my partner." Interestingly, virtually no men indicate debt is managed by "only my partner."

 

Differing perceptions about who is responsible for debt-management within the relationship could reflect a lack of communication, making it difficult for homeowners to become debt-free. "The good news is that, in general, most people feel they have some responsibility for managing household debt," shared Doug Conick, President and CEO of Manulife Bank of Canada. "However, the results seem to indicate that many couples might not be discussing debt with one another. I strongly recommend that any Canadians who don't have a plan for becoming debt-free reach out to an independent financial advisor for personalized debt management advice."

 

The survey also looked at attitudes by age group and found that respondents in their fifties are more likely to report shared responsibility for debt management (52 per cent) while those in their thirties are less likely to do so (43 per cent). Regionally, Quebec (53 per cent) and Alberta (52 per cent) homeowners were most likely to indicate shared responsibility for managing debt while Ontario (42 per cent) homeowners were least likely to do so.

 

Women are more concerned about debt, less optimistic

In general, women appear to be more concerned about debt, but at the same time they are less confident about being able to reduce or eliminate it. Slightly more women (81 per cent) than men (75 per cent) listed "being or becoming debt-free" as a top financial priority.

 

Men and women place relatively equal importance on being debt-free at retirement - with about eight in 10 indicating this is a high priority. However, more men (55 per cent) than women (49 per cent) are confident that they'll achieve that goal. This perception may be influenced by recent experience, with fewer women (47 per cent) than men (54 per cent) indicating a reduction in debt over the past 12 months.

 

Moreover, women appear to be more averse to the idea of retiring with debt outstanding - 60 per cent indicate they would find this scenario very stressful compared to just 42 per cent of men. "In many households there's a discrepancy in attitudes, perceptions and expectations between couples with regards to debt, likely because they are either managing their own personal debt separately or just aren't talking enough to one another about finances," added Mr. Conick.

 

The survey found that the desire to be debt-free at retirement is relatively consistent across Canada. However, respondents in BC and Quebec (each at 57 per cent) are most confident about achieving that goal while residents of Atlantic Canada (44 per cent) are least confident.

 

Debt-reduction is a priority and most are willing to reduce spending - just not on technology

More than three quarters (77 per cent) of Canadian homeowners indicate that it's very important for them to reduce their debt in the next 12 months, but only 56 per cent feel they're likely to achieve this goal. This relative lack of confidence may reflect experience over the past year. Nearly a quarter of respondents (24 per cent) report an increase in debt over the past 12 months and a further 15 per cent report no change in their debt over that time frame. Regionally, homeowners from BC (56 per cent) and Atlantic Canada (54 per cent) are the most likely to report a reduction in debt over the past 12 months. Homeowners in Manitoba and Saskatchewan are the most likely to report an increase in debt over the past year (30 per cent).

 

When asked what types of discretionary spending they would be willing to cut back on if it would help them become debt-free sooner, only 12 per cent of homeowners would be willing to cut back on phone/internet/cable services - reflecting the increasingly "wired in" nature of our society. At the other end of the spectrum, the discretionary spending categories people are most willing to cut back are household furnishings/appliances (42 per cent) and dining out (41 per cent).

 

"Finding and reducing non-essential expenses is a good first step in tackling debt." said Mr. Conick. "Another great strategy is to make your money work harder by organizing your finances more efficiently." The survey found that nearly a third (31 per cent) of homeowners list the interest rate on their debt as a factor making it difficult for them to become debt-free. "Given our current low interest-rate environment, an easy way for many homeowners to reduce interest costs might be to simply consolidate their debt at a lower rate."

 

While respondents in all regions indicate they are least willing to cut back on phone/internet/cable, they differ somewhat on which discretionary expenses they are most willing to reduce spending. Atlantic Canadians (50 per cent) and Ontarians (44 per cent) are most willing to cut back on dining out. In Alberta, Saskatchewan and Manitoba, 48 per cent indicated they'd be willing to cut back on household furnishings/appliances.

 

Women and men differ somewhat in this area as well. Women are more apt to reduce spending on household furnishings (45 per cent), dining out (44 per cent) and entertainment (39 per cent) than men (40 per cent, 37 per cent and 32 per cent respectively).

"Overall, this survey tells us that Canadian homeowners want to be debt-free, but that they're not necessarily talking with one another about how to get there," remarked Mr. Conick. "To avoid carrying debt into their pre-retirement and retirement years, it's important to get a debt-management plan in place."

 

About the Manulife Bank of Canada Debt Survey

The Manulife Bank of Canada poll surveyed 2,127 Canadian homeowners in all provinces between ages 30 to 59 with household income of more than $50,000. The survey was conducted online by Research House, an Environics company, between August 13-23, 2012. Full survey results, including additional regional, gender and
age-group comparisons, are available at manulifebank.ca/debtresearch.