It’s only the second week of 2026, but most Canadians have already written the year off. MNP’s latest Consumer Debt Index survey shows households expect rising inflation, deteriorating housing affordability, and worsening public finances. While some are tightening budgets and seeking advice, many—especially young adults—are checking out entirely. One thing most Canadians agree on? Life is getting worse in 2026.
Nearly 3 in 4 Canadians Expect The Cost of Living To Worsen
Canadians aren’t buying into the recent narrative of economic resilience. The latest survey found 71% of respondents expect the cost of living to worsen. Most expect this decline to be driven by the erosion in housing affordability (59%), rising inflation (54%), and a weaker job market (52%). Two in three respondents also expect government debt to worsen. These expectations contrast sharply with recent economic data.
“There is a widespread sense that household finances will come under increasing pressure, fueling heightened anxiety about economic security in the year ahead,” explains MNP president Grant Bazian. “Canadians expect most aspects of daily life to worsen rather than improve in 2026.”
Canadians Face Economic Anxiety: Most Preparing, Many Paralyzed
Most Canadians are bracing for impact by actively adjusting their financial plan. MNP says 59% are in “fight” mode, taking steps like budget cuts (43%), debt consolidation (12%), or seeking professional advice (11%). Proactive measures can help cushion financial shocks, but they also become a self-fulfilling prophecy as the reduced spending amplifies headwinds.
At the same time, 32% are in “flight” mode, fleeing their finances. Many are relying on credit for essentials (17%), avoiding financial conversations (15%), or ignoring the problem altogether (12%).
Young Canadians aged 18 to 34 are most likely to check out—51% are in flight. Nearly 1 in 4 (23%) feel completely paralyzed by their situation.
“Sustained financial pressure is prompting both decisive action and withdrawal among Canadians,” explains Bazian.
More Disposable Cash But Over 2 in 5 Canadians Near Insolvency
Canadian incomes have made real gains in recent years, boosting finances last quarter. The average Canadian had $907 left over after expenses, up 21.9% (+$163) from last quarter. However, averages obscure distribution, and the improvement barely moved the needle for the most vulnerable households.
Despite the bump, 41% of households are still within $200 of insolvency, and fewer than half (47%) have six months of emergency savings. Nearly half (48%) remain concerned about debt repayment heading into 2026.
“For these households, ongoing affordability challenges and borrowing costs leave little room for error as they head into 2026,” explains Bazian.
The disconnect? Rising incomes haven’t translated into stability. A rise in real wages means it outpaced inflation, but they still fell behind essentials like food and shelter, as a recent RBC report highlights. Lower-income households, often those early in their career, tend to see these segments take up a disproportionate share of their income. As a result, the benefits from rising wages provided little relief.
English (US) · 