More than half of Canadians said they feel positive about their current finances but a similar share expect 2026 to be a difficult year and many are already struggling to cover basic expenses, new research from H&R Block Canada suggested.
For insurers and intermediaries, the numbers point to a consumer base under sustained pressure and a growing risk that households trim coverage, increase deductibles or lapse policies to free up cash.
H&R Block's late-February 2026 survey of 1,545 adults found that 53% feel good about their current financial situation. At the same time, 54% worry that 2026 will be financially challenging, and 79% of working Canadians are concerned their income is not keeping pace with the cost of living.
Those findings are consistent with broader data: a recent Financial Resilience Institute study found 79% of households said rising prices have outpaced income growth, and nearly half reported difficulty meeting everyday expenses.
Almost six in 10 Canadians who earn an income (58%) said that even with what they consider a decent salary, it is hard to make ends meet for groceries, gas and other essentials. The pressure is most acute in Atlantic Canada (67%), Alberta (66%) and Saskatchewan/Manitoba (64%), followed by Ontario (59%), British Columbia (53%) and Quebec (51%).
Overall, 35% of respondents said they cannot stretch their paycheque to their next payday and often rely on credit cards, overdraft or short-term loans to bridge the gap. While 62% of working Canadians said they live comfortably at their current income level, 38% do not, and 46% said their paycheque only covers day-to-day living costs with no money left over.
Despite this, 55% of Canadians reported that they are able to save at least some money each month, compared with 41% who said they are not. Among those with debt, 46% are concerned about their ability to manage credit cards, loans and mortgage payments, even after the Bank of Canada’s initial rate cuts in late 2025 and early 2026.
Given the strain, 72% of Canadians said they plan to reduce spending in 2026, while just 14% intend to increase it. Among those who are saving, 77% expect to put less into savings because of higher costs.
Other surveys reinforce the picture. FP Canada's 2026 Financial Stress Index again identified money as Canadians' top source of stress, ahead of work, health and relationships, with around four in 10 citing finances as their primary concern.
Meanwhile, Statistics Canada's Canadian Social Survey reported in August 2024 that 44% of Canadians said rising prices were greatly affecting their ability to meet day-to-day expenses.
Sustained financial pressure on households comes alongside continued premium growth in home and auto.
Rates.ca estimates that auto insurance premiums rose about 7% and home premiums 6% to 7% year‑over‑year through late 2025, driven by higher repair costs, climate‑related losses and reinsurance pricing. In that environment, the combination of rising premiums and flat or lagging incomes raises clear retention and affordability risks.
Consumers looking to cut monthly outgoings may respond by shopping aggressively, raising deductibles, dropping optional perils, or scaling back endorsements such as rental car coverage and sewer backup. At the margin, some may allow policies to lapse, particularly for non‑mandatory covers such as tenant’s insurance or term life.
Historically, lapse rates in individual life and health products have been correlated with economic stress, and recent research from the Financial Resilience Institute shows that 23% of Canadians have less than three weeks of liquid savings, leaving little buffer for premium shocks.
On the claims side, tighter household finances can encourage behaviors such as under‑insurance, slower maintenance on homes and vehicles, and greater sensitivity to claim settlements, all of which can affect loss experience and dispute rates. Insurers may need to factor rising financial stress into fraud analytics and customer‑care models.
The 2026 survey showed that 65% of Canadians expect a tax refund this season, but 41% are not confident they understand the credits and deductions available to maximize that return.
A separate H&R Block survey in 2025 found that 65% of Canadians did not know they can amend returns going back 10 years to claim missed amounts; when informed of this, 38% believed there were still benefits they could claim, and 34% said they were inclined to review prior filings.
The firm said its Free Second Look service, which reviews prior‑year returns filed elsewhere, uncovers an average of about $2,725 in additional entitlements for roughly 60% of clients. Commonly missed items include the Canada Workers Benefit, disability and caregiver credits, medical expenses beyond what group or individual insurance reimburses, and tuition and home‑related credits.
