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Column: The Financial Stress Index

Thirty-eight per cent of Canadians say financial stress is their number one worry.
Richard Vetter
Richard Vetter (WealthSmart)
Richard Vetter is a columnist with the Richmond News.Richard Vetter

You know there’s real stress when someone adds another index to measure it!

The Financial Planning Standards Council (CFP Canada) has released its Financial Stress Index Study, which reveals that 38 per cent of Canadians say financial stress is their number one worry. Fifty-one per cent of Canadians say they have lost sleep because of financial worries. Seventy-seven percent say at least one aspect of their finances causes stress. Younger Canadians and those without a financial planner experience the most stress.

Financial stress takes on many forms; it could be job insecurity, debt, investing challenges, lack of retirement savings or simple day-to-day living expenses. Financial stress is not only affecting the lives of individuals, but also families and communities as well. COVID-19 has certainly not helped. Forty-five per cent of Canadians say the pandemic has impacted their financial stress.

Thirty-nine percent believe that paying down debt would reduce financial stress. 39% also say that saving more would help reduce financial concerns. Younger Canadians are more likely to believe that saving more, having an emergency fund, creating a budget, building a financial plan, or understanding their expenses would help alleviate stress.

We all know that the current economic situation has been difficult for many people, but it's important to get organized and prepared for what is ahead.

Seventy-nine per cent of Canadians have taken at least one step to reduce their financial stress. Nearly four in ten have paid down debt while a third have tracked their expenses and a similar number have saved more.

Thirty-five per cent of Canadians say they work with a financial professional. Those who feel more hopeful about their financial future are also more likely to say they work with a financial professional.

Although hindsight is 20/20, it is helpful to consider what we might have done differently. Eighty-two per cent of Canadians have at least one financial regret. Forty-five per cent say if they could go back in time, they would have saved more money or started saving earlier. Another 40% wish they had started investing more/earlier/wiser. We can’t relive the past, but these facts can guide our future steps!

Is financial planning the cure for financial stress? The numbers speak for themselves. According to the Financial Stress Index, Canadians who work with a Certified Financial Planner (CFP) feel:

  • Far less likely to say money was their top concern, compared to those who don’t work with a CFP (23% vs. 39%)

  • Less likely to lose sleep because of financial worries (40% vs. 52% without a CFP)

  • Significantly less likely to have faced health issues due to financial stress, compared to those who don’t work with a CFP (20% vs. 31%)

  • More hopeful about their future (73% vs. 56% wo don’t work with a CFP).

We are feeling more financial stress than ever but there is a way out. Rather than focusing too hard on the question of “how” to move ahead, consider instead “who” can help you build a financial plan to help achieve the goals that matter to you.   A Certified Financial Planner can help.

 

Richard Vetter is a Certified Financial Planner, and owner of WealthSmart Inc. To find out more, visit www.wealthsmart.ca