If you are like most people, you have at least some debt, as your mortgage, car payments, credit card balance, and student loans all contribute to your total debt.

Below, the average debt by age in Canada will be summarized, so you can see how your money compares. Then, some of the main reasons for the increasing debt of Canadians will be explained.

Average debt by age group in Canada:

First of all, it is important to understand that debt is normal, as very few Canadians are 100% debt-free. Even those with near-perfect credit scores likely have a car loan or student loan they are paying off.

Here is the average debt by age group in Canada as of 2019, according to the latest data sets from Statistics Canada:

Under 35: $69,500

35 to 44: $105,100

45 to 54: $130,100

55 to 64: $80,600

65 and over: $49,900

The total measured debt includes:

Mortgage debt

Credit card debt

Student loans

Car loans

Other debts

To take a closer look at Canadian debt, I find that median data as of 2019 provides a more accurate view:

Under 35: $19,000

35 to 44: $35,200

45 to 54: $55,000

55 to 64: $30,000

65 and over: $10,000

Why is consumer debt increasing in Canada?

Over the past year, consumer debt has increased significantly. This is especially true for credit card debt, where average monthly spending per credit card rose by 17.5 percent in the first quarter of 2022 compared to the previous year, according to a recent report from Equifax Canada.

In the report, Rebecca Oaks, Vice President of Advanced Analytics at Equifax Canada, stated that "Generation Z and Millennials are increasing consumer spending the most."

Economic Inflation

Although inflation is slowly receding, it remains relatively high, resulting in higher costs for everyday goods, including groceries and fuel. This in turn means Canadians are spending more monthly than they were before 2022, when inflation started to rise.

Unfortunately, workers' wages have not increased with inflation. This means the average Canadian has less money to spend, increasing their reliance on credit cards to purchase daily necessities.

Interest Rate Increases

To keep inflation under control, the Bank of Canada steadily raised interest rates throughout 2022 and discussed further rate hikes this year. As the federal interest rate increased, variable rates also rose, such as those offered by credit card companies.

Those with a credit balance carried over to the next month must now pay more interest on their credit card debt, increasing their total debt.

Setting Up a Plan to Manage Your Debt

Short-term debt accumulation may be inevitable due to rising interest rates and inflation. However, it is important to create a plan to control your debts.

A reliable budget plan combined with consistent effort is the best way to get out of debt:

Review your monthly budget to find areas where you can save, try to pay large amounts on credit card debts as soon as possible, and consider doing a side job to earn extra money that you can put towards paying off your debts.