Rising housing costs and debt overwhelm 77% of financially stressed Canadians, warns new survey
The National Payroll Institute has issued a warning, urging Canada to address the declining financial wellness of workers nationwide.
Despite slowing inflation and falling interest rates, the 16th Annual National Payroll Institute Survey of Working Canadians shows that financial stress among workers continues to rise.
This financial strain, which has been intensifying since 2021, is highlighted in the survey analyzed by the Financial Wellness Lab of Canada using machine learning.
The survey divides working Canadians into three clusters: financially coping, financially comfortable, and financially stressed.
The proportion of individuals in the financially stressed group has grown to 41 percent from 37 percent in 2023, while the financially comfortable group has decreased to 28 percent from 32 percent.
One in four respondents revealed that they live paycheque-to-paycheque, with many indicating they would struggle to meet financial obligations if their pay were delayed by just one week.
“These results are a stark reminder of the growing financial pressures Canadians face,” said 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.”
Two major factors contributing to the increased financial stress this year include overreliance on debt and rising housing costs. 77 percent of the financially stressed group and nearly half of all respondents report feeling overwhelmed by debt.
Furthermore, 89 percent of the stressed group and 72 percent overall worry about rising housing costs. Close to 60 percent of those in the financially stressed cluster spend over 40 percent of their income on housing.
Financial stress is affecting Canadians' personal lives and workplace productivity. 66 percent of the financially stressed group report that financial worries have harmed their relationships, and 16 percent admit they have lashed out at others due to financial burdens.
36 percent of those in the stressed cluster feel socially disconnected, compared with 24 percent of all survey respondents, and 23 percent say they are losing sleep over financial anxiety.
In the workplace, 56 percent of workers report that financial stress negatively affects their job performance. 45 percent say they spend at least 15 minutes a day worrying about finances at work, while one in 20 spend more than 90 minutes a day.
This loss of productivity due to financial stress amounts to $53.9bn annually, up from $46bn in 2023, $40bn in 2022, and $27bn in 2021.
Despite these challenges, a growing number of Canadians remain optimistic about their financial futures. However, the National Payroll Institute warns against false optimism, stressing the need for urgent action to address poor financial habits related to debt, saving, and spending.
“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,” Tzanetakis noted.
Adam Metzler, lead researcher at Canada's Financial Wellness Lab and Associate Professor at Wilfrid Laurier University, added, “Canadians are struggling. There is no doubt about that. We must act now and work together to create a more secure and financially stable future for all Canadians.”
The Financial Wellness Lab’s analysis suggests that focusing on saving, reducing debt reliance, and controlling spending can help Canadians move from the financially stressed group to more stable clusters.
Interestingly, earning more is not necessarily the key to financial well-being, as the survey found that 29 percent of those earning $100,000 or more per year are still living paycheque-to-paycheque.
The National Payroll Institute urges all levels of government to collaborate with experts, including the Financial Wellness Lab, to implement a structured and comprehensive strategy aimed at improving Canadians' financial wellness.
This strategy should go beyond financial literacy, offering research-based tools and resources to help individuals achieve long-term financial stability.
