Household debt has reached an all-time high of $1.3 trillion in 2008, yet Canadians perceive their financial condition to be better than it is, according to a new report by the Certified General Accountants Association of Canada (CGA-Canada).

The report is based on a consumer survey conducted in November 2008. The survey asked Canadians to reflect on the changes that had occurred in their household finances over the past three years, with a focus on household debt, income, assets, wealth, spending and savings.

In particular, 49% of Canadian families with one or more children under the age of 18 reported that their debt had increased.

Lines of credit and credit cards account for the largest proportion of consumer debt, with 85% of Canadians reporting that they have outstanding debt on a credit card.

Some 21% of Canadians who are in debt say that they are in over their heads and can no longer manage their debt load.

“We need to recognize that the financial conditions of Canadian households have deteriorated,” says Rock Lefebvre, vice president, research & standards of CGA-Canada. “The situation needs to be rectified not only to establish financial security and well being for Canadians, but also to maintain a healthy economic environment.”

Lefebvre adds that there is an opportunity for government and the educational community to help Canadians improve their financial capability. More needs to be done in educating the public on money management, spending, shopping habits, warning signs of financial difficulties and obtaining and using credit.

IE