Scale of cost-of-living crisis ‘not seen in more than a decade'
The findings of a recent, independent Financial IQ survey that evaluated the financial resiliency of the general Canadian public and WFG Canadian insurance agents were published by World Financial Group Insurance Agency of Canada Inc.
According to the research, 41% of families in Canada say they are competent enough to understand their own finances, and 70% place a high priority on the cost of living. In addition, 37% of survey participants don't have a financial plan in place, making them at risk for economic emergencies like losing their jobs.
The research posed a series of questions to determine how someone perceives their finances and if they are equipped to face financial shocks. Financial IQ scores ranged from low (0 to 3.9), medium (4 to 6), to high (6.1 to 10) based on the replies received in Canada.
The average Financial IQ for the general population was 5.3, while WFG training agents scored slightly higher at 5.4. However, tenured WFG agents at the Senior Marketing Director level scored significantly better on average, at 8.2. Financial resilience may be evaluated over time using the Financial IQ score.
"The Financial IQ study highlights that people are experiencing cost-of-living challenges that Canada has not seen in more than a decade," said Todd Buchanan, WFG President.
Managing everyday expenses is ranked as the top short-term financial priority by 70% of Canadians. Even people with larger incomes believe they must prioritize their daily expenses. The cost of living was cited as a financial priority by more than half (65%) of individuals making more than $80,000 CAD.
Among individuals earning less, this increases dramatically. Among those making under $40,000 CAD, 74% said that paying for necessities was their top financial priority.
The latest pandemic-related financial shock to Canadian households saw 15% take on new credit card debt and 12% borrow money from others. The resilience has not been re-established despite the exhaustion of several backup savings schemes. Less than half of the general public feels in charge of their finances and secure in their future financial stability.
Only one in four (27%) Canadian households are able to sustain basic expenditures for a year or longer if faced with an unexpected life event, indicating that they are not prepared for financial shocks. Less than 58% of Canadians as a whole have some sort of financial plan in place, and 22% of Americans and Canadians as a whole could only pay their bills for one month or less.
"World Financial Group is committed to helping people build and protect their financial wellbeing. WFG will continue to measure the Financial IQ of agents and the general population in the future, to track the public's knowledge, confidence, and financial resilience in the years ahead," Buchanan said.
