Algorithm-based analysis of data spanning 11 years shows why ‘Blue Monday’ is more than a marketing gimmick
For many Canadians, the third Monday of January — also known as “Blue Monday” — represents the most depressing day of the year. Some may attribute it to the weather, while others might link it to the crushing psychological hit that comes from seeing a smaller-than-usual paycheque.
But according to a new study released by the Canada Payroll Association, one’s sense of wellness with respect to finances goes beyond their paycheque.
The study, titled Learning about Financial Well-Being in Canada, found that 20% of those with a minimum household income of $150,000 suffered from financial stress. In comparison, 50% of those in households earning less than $50,000 reportedly felt the same.
And while millennials are widely perceived to be the generation worst hit by financial stress, the study found that those over the age of 40 represented 50% of those who feel financially stressed.
To determine the root cause of financial stress, the Western-Laurier Financial Data Analytics Laboratory analyzed 11 years’ worth of Canadian Payroll Association National Payroll Week Survey data, which includes a total of 35,000 unique responses.
Using cluster analysis — an algorithm-based methodology that arranges respondents into distinct groups based on their shared similarities as well as their differences from all other groups — the lab was able to segregate working Canadians into three groups.
The first group, described as financially comfortable, were characterized by a shared ability to manage missing a paycheque, their tendency to save money, and focus on work-life balance rather than salary.
On the opposite extreme were financially stressed Canadian workers. Aside from having difficulty in coping with a brief financial setback, they tend to save little to none of their income, put a great emphasis on salary, spend all of their net pay or more, carry the most debt, and report an increase in their debt load over the previous year.
The third group, financially coping, occupied the financial middle ground.
The overall takeaway, according to the Canadian Payroll Association, is that people’s ability to deal with financial setbacks and the savings habits they exhibit are the strongest determinants of financial stress.
“This research shows that Blue Monday is much more than a marketing gimmick,” said Canadian Payroll Association President Peter Tzanetakis. “Whether it's in the spirit of the season or not, when we spend beyond our means, financial stress follows.”
