What are the leading causes of financial stress?
Financial stress is becoming a problem for more and more Canadians, according to a recent report.
Currently, 44 per cent of Canadians cite money as their top stressor, reports FP Canada.
That number is up from 40 per cent in 2023, 38 per cent in 2022 and 38 per cent in 2021.
What are the leading causes of financial stress? Canadians cite:
- elevated grocery prices (69 per cent)
- inflation (60 per cent)
- housing-related costs (52 per cent).
“There’s no denying that persistent affordability concerns can cause significant financial strain, so it’s no surprise that Canadians are continuing to feel the impact of these difficult conditions,” says Meghan MacPherson, a QAFP professional at Impact Financial Group.
What are the effects of financial distress?
Financial stress has had negative effects on more than half (54 per cent) of Canadians, including:
- lost sleep (49 per cent)
- anxiety and depression (38 per cent)
- disruptions in workplace productivity (16 per cent)
- strained personal relationships (16 per cent).
“While thoughtful planning and proactive measures can help reduce financial stress caused by economic factors beyond our control, the Financial Stress Index shows that working with a financial professional can help Canadians create a sense of confidence and control in the face of uncertainty.” says MacPherson.
Here’s how financial wellbeing is affecting workers’ productivity, say two experts.
On a positive note, Canadians seem to be more proactive when it comes to maintaining a healthy financial state, found FP Canada’s study based on a Leger survey of more than 2,000 Canadians between Feb. 28 and March 11, 2024.
Improving financial wellness
Over nine in 10 (91 per cent) of Canadians have taken at least one action to reduce financial stress in the last year.
The most popular such actions are:
- tracking expenses (45 per cent)
- paying debt (38 per cent)
- increasing savings (33 per cent).
Nearly one quarter (24 pe cent) of Canadians also plan on paying off outstanding credit card debt within the next 12 months. That’s compared to 21 per cent in 2023 and 19 per cent in 2022.
“Canadians are adopting a fiscal-responsibility mindset, which is at the heart of financial empowerment and long-term financial stability. It’s a powerful, positive reminder of the value of resilience in the face of adversity,” says Ravi Chhabra, a CFP professional.
“While it's undoubtedly disheartening, we can’t ignore the reality of the current economy and the limitations it places on the financial choices of Canadians. Prioritizing debt repayment while also budgeting for the things that bring us joy will do more than help us lessen immediate financial burdens. It will also lay the groundwork for a future where we can prioritize life's pleasures without compromising our financial health.”
As Canadians embrace the concept of financial well-being, 50 per cent are now expressing increased optimism about their financial futures, up from 47 per cent in 2023, despite experiencing higher stress levels.
Young Canadian workers are expecting a pay increase if they will be forced to abandon the hybrid work model, according to a previous report from IWG.
How can employers help employees manage financial stress?
Here are five ways employers can help workers deal with financial stress, according to Career Builder:
- Encourage a culture that welcomes financial conversations.
- Make an employee assistance program (EAP) benefit.
- Provide onsite childcare.
- Allow employees to telecommute.
- Offer educational assistance.
Many workers want their employer to cover at least part of the expenses they would have if they will be required to return to the office full time, according to a previous Capterra report.
