January 19, 2026
Despite recent gains in income, Canadians are entering 2026 with growing pessimism about their financial future. New survey data from MNP’s Consumer Debt Index shows that most households expect rising costs, worsening housing affordability, and mounting economic pressure in the year ahead.
While some Canadians are actively adjusting their finances, a large share – particularly younger adults – report feeling overwhelmed or disengaged. Across age groups and income levels, one sentiment stands out: confidence in living standards is deteriorating.
Nearly Three-Quarters of Canadians Expect the Cost of Living to Rise
According to MNP’s latest Consumer Debt Index, 71% of Canadians expect the cost of living to worsen in 2026, highlighting a sharp disconnect between recent economic data and household sentiment.
Respondents identified several key concerns driving this outlook:
- Housing affordability (59%)
- Inflation pressures (54%)
- Job market uncertainty (52%)
- Rising government debt (two-thirds of respondents)
MNP president Grant Bazian said the findings reflect widespread anxiety, with many Canadians expecting daily life to become more difficult rather than easier in the year ahead.
Canadians Are Split Between Financial Action and Avoidance
The survey shows households responding to economic pressure in very different ways.
About 59% of Canadians are taking proactive steps, including cutting expenses, consolidating debt, or seeking professional advice. While these actions can improve individual resilience, broad-based pullbacks in spending may weigh on economic growth.
At the same time, 32% of Canadians report avoiding their financial situation, relying on credit for essentials, postponing financial decisions, or disengaging altogether.
Younger Canadians Feel the Pressure Most Acutely
Financial stress is most pronounced among younger adults.
Among Canadians aged 18 to 34, 51% fall into the avoidance category, while 23% report feeling completely paralyzed by their financial circumstances.
MNP notes that prolonged affordability pressures are pushing younger households toward disengagement, particularly as housing and debt costs remain elevated.
Disposable Income Is Rising, But Many Remain Near Insolvency
On average, Canadian households reported $907 in disposable income after expenses, a 21.9% increase quarter-over-quarter. However, averages mask significant financial fragility beneath the surface.
Key indicators remain concerning:
- 41% of households are within $200 of insolvency
- Only 47% have six months of emergency savings
- 48% are worried about their ability to repay debt in 2026
For many Canadians, recent income gains have not translated into financial stability.
Why Higher Wages Haven’t Restored Confidence
While real wages have risen, essential costs such as housing and food continue to consume a disproportionate share of income, especially for lower-income and early-career households.
Recent RBC analysis shows that core living expenses have outpaced headline inflation, limiting the real-world benefits of wage growth. As a result, higher incomes have provided only marginal relief for households most exposed to affordability pressures.
What This Signals for Household Finances in 2026
Canada enters 2026 with stronger income data but weaker consumer confidence. The findings suggest that affordability challenges, rather than income growth alone, will shape household behavior and economic momentum in the year ahead.
Without meaningful relief on housing and essential costs, rising wages may not be enough to restore financial security for a large share of Canadians.
References
MNP Ltd. (2026). Consumer Debt Index: January 2026. https://mnp.ca
Royal Bank of Canada. (2025). Consumer spending and affordability pressures. https://www.rbc.com
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