50% of Canadians face insolvency, survey finds
Financial stress doesn't discriminate. It doesn't matter if you are young or old, how much money you make, or whether you are male or female. In fact, in a new study from the Canadian Payroll Association and the Western-Laurier Financial Data Analytics Laboratory, found that financial wellness is a result of so much more than the size of your paycheque.
Financial stress can happen if you make $150,000 a year or $50,000.
It all comes down to how we handle a financial setback, such as missing a paycheque, and our savings habits.
Looking at historical data, the study found that Canadians are often in one of three groups: those who are financially stressed, financially coping, or financially comfortable.
In which category do you find yourself?
Common characteristics of those who are financially comfortable include the ability to work through and manage missing a paycheque, having a tendency to save money, and prioritizing a work-life balance over salary.
Working Canadians who are financially stressed find it difficult to manage a brief financial setback, have little savings, focus on salary, are heavily indebted, typically have car loans, student loans, outstanding lines of credit, credit card debt and continue to watch their debt increase year over year.
Working Canadians who are financially coping fall directly in between the groups referenced above.
What I have found over the years is lifestyle more than anything else impacts your ability to manage financial stress. Lifestyle inflation can creep in when you least expect it. Couple this with spending more than you earn and you begin to see a disconnect between wanting to pay down debt and the ability to do so. You can only cope for so long. Stress will kick in and can be catastrophic to your finances and has the potential to derail your best intentions to take control of a situation.
There are some key signs you may not be coping financially, such as taking out large amounts of money and spending recklessly, gifting money unexpectedly, and racking up debt.
What creates stress in our financial lives is personal. It could be overexposure in the markets, or the knock-on effect of higher payments if rates tick higher. You could lose your job, your marriage could break down, you could have a child or have to care for a parent who is ailing. The point is a financial breaking point can happen at any time.
Before you let financial stress become debilitating, ask for help and try following the three ‘Fs:’
Focus. Focus on your current situation, take control where you can, develop a plan and stick to the plan.
Fight. Try not to become aggressive or impulsive. That could make the situation worse.
Freeze. Don't become paralyzed by fear. Doing nothing isn't an option.
Make 2020 the year you take control of the financial stress in your life – and remember, you don't have to do it alone.