'These results are a stark reminder of the growing financial pressures Canadians face'
Financial stress is a growing problem in Canada, according to a recent report.
Currently, over two in five (41%) of Canadians belong to the financially stressed cluster, reports the National Payroll Institute. That number is up from 37% in 2023.
And one in four say that they are living paycheque to paycheque and would find it challenging to meet their financial obligations if their pay were delayed just one week, while 29% of those who earn $100,000 or more each year are still living paycheque to paycheque.
Also, those belonging to the financially comfortable cluster has dropped to 28% from 32% last year.
"These results are a stark reminder of the growing financial pressures Canadians face," says Peter Tzanetakis, president and CEO of the National Payroll Institute. "The increase in financial stress reflects real struggles impacting individuals, families, and workplaces across the country that cannot be ignored. Employees, employers, and policymakers all have a role in improving financial wellness."
Nearly six in 10 (58%) Canadian households have reduced day-to-day expenses in response to financial strain over the last year, according to a previous report from the World Financial Group (WFG).
Causes of financial stress in Canada
Over-reliance on debt and soaring housing costs are two major factors that are contributing to increased financial stress this year, according to the National Payroll Institute’s survey of 1,500 working Canadians from July 2 to 16, 2024.
Over three-quarters (77%) of those in the stressed cluster and nearly half of all respondents feel overwhelmed by debt. Nearly 9 in 10 (89%) of those in the stressed group and 72% overall are worried about rising housing costs.
Nearly 60% of those in the stressed cluster are spending over 40% of their income on housing.
The number of Canadians who are struggling financially today is bigger than the comparable data recorded when the COVID-19 pandemic was still ongoing, according to a report from Statistics Canada (StatCan). Overall, 45% of Canadians report that rising prices are greatly affecting their ability to meet day-to-day expenses, 12 percentage points higher than two years earlier (33%).
How does financial stress affect mental health?
Financial stress is also hurting other aspects of Canadians’ life, according to the National Payroll Institute.
Two-thirds (66%) of those in the stressed cluster admit financial stress has harmed their relationships, with 16% admitting they have lashed out at others because of their financial burden.
Over a third (36%) of the stressed cluster – compared with 24% of all survey respondents – have become more socially disconnected. Nearly a quarter (24%) of the stressed cluster reported losing sleep due to finance-related anxiety.
In the workplace, 56%of workers report that financial stress has a negative effect on their performance.
Nearly half (45%) of workers surveyed say they spend at least 15 minutes per day thinking about their finances on the job – and one out of every 20 respondents spend more than 90 minutes daily.
Added together, time spent worrying about finances at work equates to $53.9 billion in lost productivity each year. This is up from $46 billion in 2023, $40 billion in 2022, and $27 billion in 2021.
"Overwhelmingly, the data captured within the survey underscores the financial hardships faced by working Canadians, so it's hard to accept the optimistic outlook of respondents as anything more than a dream that is likely to be deferred," says Tzanetakis. "The data tells us that hope should only be found in taking action to improve financial habits related to debt and spending."
