Financial anxiety continues to weigh on Canadians
IT’S PRETTY BRUTAL BECAUSE IT’S BEEN GOING ON FOR SO LONG. I TALK TO TWO-INCOME FAMILIES WHO ARE ADMITTEDLY EARNING A LOT AND THEY’RE STILL STRUGGLING. I DON’T KNOW ANYONE WHO ISN’T FEELING IT THESE DAYS.
— KELLEY KEEHN, FINANCIAL EDUCATOR AND AUTHOR
Canadians may finally be in for some financial relief this year as inflation cools and interest rate cuts loom, but many still appear to be nervous about what lies ahead.
Financial anxiety continues to grip Canadians, with half of those under 55 worried about losing their jobs, according to recent data from the non-profit Angus Reid Institute. These respondents are also more likely to have smaller savings cushions. Most said they wouldn’t be able to handle a surprise expense of more than $1,000, and two in five said they couldn’t afford to contribute to registered retirement savings plans or tax free savings accounts because there’s no money left at the end of the month.
“It’s pretty brutal because it’s been going on for so long,” said Kelley Keehn, a financial educator and author. “I talk to two-income families who are admittedly earning a lot and they’re still struggling. I don’t know anyone who isn’t feeling it these days.”
Part of the anxiety around job losses has to do with a changing labour market. 2023 was considered an employees’ market with plenty of job openings, she said. This year people are afraid to ask for raises and “unabashed” about tightening budgets and seeking out discounts, regardless of their socio-economic status.
Rising mortgage rates when homeowners renew have added to that anxiety.
“I think what’s always the most worrisome for the economy is how people are feeling about the future and right now they’re scared about the present,” she said. “If your mortgage payments have doubled, that’s a tough pill to swallow for the short term and this has been going on for a while.”
The Bank of Nova Scotia’s most recent Worry Poll revealed more evidence of financial anxiety. While fewer Canadians are fretting about their finances this year compared to last (46 per cent versus 54 per cent in 2023), those who are worrying spend more time doing so (18 hours per week compared to 16 in 2023), the survey showed.
“I remember being surprised there were that many hours last year and it’s gone up even more,” Kingsley Chak, senior vice-president of retail, deposits, savings, and investments at Scotiabank, said.
People’s biggest worries centre on meeting day-today expenses, paying down debt and saving for an emergency. But concerns around saving for retirement have decreased, he added, likely due to the many present-day worries people are trying to manage.
Parents with children under 18 are worrying more about money than those with older children, with almost half saying they are prepared to assist their kids financially, including helping with a house down payment one day, the Scotiabank survey said. Still, those with adult children aren’t off the hook. Shawn Kauth, AVP Product Strategy and Practice Management at Meridian Wealth, said he has seen an increase in parents gifting money to grown children to pay bills or enter the housing market. “Our older members are worried about their adult children . ... That’s the group we’re helping with cash flow management,” he said.
On the bright side, many Canadians are seeking help in managing their finances, with 60 per cent looking to their financial institution for advice, especially for longterm investing and retirement planning, the Scotiabank survey said. Meanwhile, members of generation Z are leading the pack when it comes to cutting costs.
“A high portion of genzs will redeem their loyalty points for everyday items ... and will take the time to go to multiple grocery stores to get the best price,” Chak said.
They’re also more likely than baby boomers to believe their financial situation will improve in the next six months.
Stressing about money is pointless and can affect workplace performance and even physical and mental health, said Meridian’s Kauth. Instead, financial literacy is key.
“We really need to help people with education around finances,” he said, noting some may want to seek out expert advice from a financial adviser. “This isn’t the first time we’ve seen this kind of economic uncertainty and there are ways to weather it that can be tailormade and customized for each client.”
One strategy is to put money into investments, if possible, to benefit from compounded interest over time. Otherwise, the focus should be on cash-flow management. “It’s about taking a hard look at your expenses, tracking where you’re spending and finding ways to spend less so you can build a little bit of a nest egg,” Kauth said.
Eliminating question marks around finances can also reduce stress, says financial planner Natasha Knox, founder of Alaphia Financial Wellness. “Sometimes anxiety is being fuelled by not really knowing what our (financial) situation is so we start to catastrophize, making things bigger than they really are,” she said. “Getting your options clear and on the table can bring anxiety down because when you know what it is, you can start to figure out what to do about it.”
Trained in financial therapy, Knox is a big advocate of mindfulness practices — be it short daily meditations or walks outside — to help nip anxious brain chatter associated with money. “Mindfulness is how we can modulate our response to what is going on around us,” she said. “It is evidence-based to actually quell anxiety.”
Self-compassion can also go a long way, financial educator Keehn said. “I think it’s about acknowledging that it’s hard and that you may never have been in this situation before and that it’s not your fault,” she said. “But it’s also about taking the reins and doing something about it.”