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The Inside Story: Mega credit, monster mortgages, and no budget – stressed yet?

It’s the most Canadian of stories—we are a little ways into 2018, but the credit card bills still reflect holiday spending and merrymaking, and most of us shudder at the thought of our bank balances. It’s also the time of year when New Year’s resolutions are drifting away… typically about eating less and exercising more. However, what about the impact—the huge impact—of financial health on overall health? Make 2018 the year you encourage your plan members to add financial wellness to their health management goals. Here’s why…

Major source of stress is financial health

In the September 2016 edition of The Inside Story when we shared Change4Life® health risk assessment (HRA) data, you may have been as surprised as we were to learn that over 40% of plan members experiencing stress indicated financial health as the source of their stress. As plan members, these people for the most part have jobs. Accordingly, we had assumed that financial stress wouldn’t show up in the data as such a big deal. Now over a year later with updated Change4Life HRA data, it’s clear that financial health is a big deal: of those who reported their stress level as moderate or higher, 50% identified the source as financial stress.

Of course, data like this triggered a research frenzy. We’ve been busy reviewing the latest findings about the financial health of Canadians to figure out how we can help plan members manage financial stress— and ideally prevent it in the first place. And what we discovered is that it’s no wonder so many plan members are feeling overwhelmed by their finances given the state of financial health in Canada these days.

Financially unwell

Statistics reveal that increasingly for Canadians all of the elements are present that lead to poor financial health:

  • Living paycheque to paycheque: A 2017 survey of Canadian employees by the Canadian Payroll Association (CPA) indicates that 47% of respondents live paycheque to paycheque. This increases to 51% for generation-Xers (those born between 1965 and 1984) and 55% for millennials (those born between 1982 and 2004). In addition, 41% of survey respondents said that they spend all of—or more than—their net pay.1 Similarly, a survey done by Ipsos in 2017 found that more than half of survey respondents are living within $200 per month of not being able to pay all their bills or meet debt obligations.2
  • High debt levels: In 2016, Statistics Canada reported that debt levels in Canada are the highest among G7 countries.3 In that recent CPA survey, 93% of employees report carrying some form of debt and 31% report that their debt rose last year.4 To provide perspective, in terms of individual debt levels, a 2016 report by Equifax—a consumer credit reporting firm—found that the average Canadian owes $22,081 in consumer debt, which doesn’t include mortgages. And on average, people between the ages of 46 and 55 have the most debt—and those who are in debt are the ones borrowing more and more.5
  • Reliance on credit: A 2014 survey conducted by the Financial Consumer Agency of Canada (FCAC) shows that 30% of Canadian consumers struggle to cover living expenses. Among those, about half rely on some form of credit to make ends meet.6
  • Using payday loans: In 2016, the FCAC reported that the proportion of Canadians using payday loans has doubled recently to more than 4% of households.7
  • Low savings: In the recent CPA study, 47% of the employees who responded reported that they are only able to save 5%—or less—of their earnings. As result, they are not prepared for unforeseen emergencies. In terms of saving for retirement, almost three-quarters of respondents reported saving only 25% or less of what they think they’ll need to retire.8

All this doom and gloom translates into financial stress for Canadians—which also means plan members. For example, similar to the Change4Life HRA statistics, the recent CPA survey found that 39% of employees surveyed feel overwhelmed by their level of debt. In addition, nearly half wish they hadn’t racked up so much debt, and nearly 40% regret the debt accumulated in the past year.9 Adding to the stress is that many feel ashamed and embarrassed of their finances. Gloomy indeed, but just how did we get here?

What’s driving financially unhealthy trends?

So why are Canadians increasingly nearer financial ruin than financial stability? Why is it that—as reported by a CIBC 2016 poll—among those incurring new debt, 32% cited managing day-to-day expenses beyond their monthly income as the primary reason for accumulating more debt?10

To some degree, the poor financial health of many Canadians—and the corresponding high financial stress levels—can be attributed to things out of our control. Things like uncertain economic conditions after the recent global financial crisis and, in some regions of Canada, skyrocketing housing and rental prices. For example, in most cases, pay raises have been modest or non-existent. In addition, more and more workplaces are opting for non-traditional employment models like temporary, contract, part-time, or freelance workers; all of which have less job security than a more traditional nine-to-five gig.

Although some financial stress is the result of factors outside our control, a lot of our financial issues are within our control—and are actually self-inflicted.

Consumption culture

Bigger and bigger homes, more and more clothes, high-end cars, and dream vacations—we want it all. And then we want more of it all. But what is driving this compulsion to spend, spend, spend? Research indicates that all this spending isn’t about meeting basic needs, but rather, it’s about filling voids in our lives, and advertising is a big influencer. And now advertising is mightier than ever— not only has the online world ramped up the amount of budget-breaking temptations we are exposed to, but also advertising can now be highly targeted to specific potential buyers.

And then there is also the issue that social media presents another spending trap for people as they try to keep up with the Joneses (or rather, the Kardashians). For example, an American study found that one in eight Americans is willing to take on $1,000 or more in debt to buy things that help depict them as leading an extravagant lifestyle.12

Another study seems to demonstrate both the phenomenon of increased exposure to ads and increased social pressure to keep up with the image of peers online. In five experiments, researchers found that just five minutes of browsing Facebook immediately lowered self-control regarding making purchasing decisions—just five minutes! Overall, users who spend relatively long periods of time on Facebook—and have extensive online social networks—are likely to have lower credit scores and more credit card debt than those who use Facebook less and have weaker networks.13

Enticed by low interest rates… and now stung by rising ones

The sustained low-interest-rate environment of the past several years made it easy for Canadians to take on more debt when they probably shouldn’t have. For example, although housing is extremely expensive in some markets, people took on exceedingly high mortgages to get that dream house or investment property. Over-extending also applied to consumer loans because apparently everyone “needs” a high-end fancy-pants car. Now compounding the problem of big debt loads is that interest rates have started to rise. This means even higher mortgage payments. How will people cope with the higher payments? Cash advances on credit cards? Payday loans? Credit card payments redirected to mortgage payments? Clearly, it’s all a vicious cycle of increasing financial pressure and deteriorating financial well-being.

Limited financial literacy

Although people may be stressed about their finances, they may not know what they can do to improve their situation, or where they can turn for help. For example, the recent CPA survey found that 26% of respondents feel earning more is the best way to improve financial well-being, compared to just 19% who think spending less is the way to go.14 This may reflect a lack of knowledge regarding other options out there—options like budgeting.

Budgeting is considered a financial-literacy basic; research from the U.S. found that budgets help people prioritize expenses and that that they are especially helpful for people experiencing financial stress.15 However, results from a FCAC 2014 survey found that only 46% of Canadians have a budget.16 And a CIBC poll reported an even lower number in 2016: only 26% of respondents planned to actually create a household budget.17

And yet another distressing finding: a 2017 Ipsos poll found that approximately 60% of respondents said they don’t totally understand how interest rates affect debt repayments.18 It’s this lack of financial literacy that can lead to taking on more and more high-cost debt.

So what’s the bottom line regarding financial stress? The outcome is the same as other kinds of stress—high stress is a risk factor for both physical and mental health issues.

A downward spiral

Like all stress, when financial stress is chronic, it’s a serious problem. For example, a Finnish study that reviewed 33 peer-reviewed studies concluded that “indebtedness has serious effects on health.”19 This finding is mirrored in a Canadian and an American study that found high debt relative to assets is associated with higher perceived stress and depression, worse self-reported general health, and higher diastolic blood pressure.20 Peter Gove, GSC’s innovation leader, health management, elaborates, “Stress due to financial worries can lead to a downward spiral of increasingly severe levels of anxiety and depression with serious thoughts of hopelessness and despair. And it’s very difficult to deal with your depression when you are faced with serious financial challenges.” (Don’t miss Peter discuss financial health in this Inside Story’s companion podcast.)

To gain additional insight into the consequences of financial stress, we contacted Cynthia Hastings-James, co-founder of BestLifeRewarded Innovations, which provides the technology that powers our Change4Life portal. Cynthia explains that “if your financial world is in disarray, it’s extremely challenging to focus on improving other aspects of your health. You are likely overwhelmed and preoccupied to the point where your financial issues overshadow all other aspects of your life.” Other health issues are neglected and so is work: In the recent CPA survey 50% of employees reported feeling that financial stress affects their job performance.23 Clearly, we need to help plan members address financial health, but how?

Becoming physically fit and becoming financially fit—they have a lot in common

Addressing financial stress is just like addressing other areas of health—it requires behaviour change. As Cynthia explains, “Just like helping plan members adopt healthy lifestyles, it’s important that behaviour change initiatives take a personalized approach by tailoring strategies to each plan member’s specific financial situation and motivators.”

In addition, Cynthia emphasizes the need to take a small-steps approach, “For example, if a doctor tells someone that if they don’t lose 50 pounds, they may have a heart attack; this may cause action paralysis or trigger the infamous ‘won’t happen to me’ syndrome. Similarly, with financial ill-health, if someone is told that if they don’t pay off their debt they will lose their home, they may become even more immobilized. We need to ensure that financial well-being resources are engaging, timely, and accessible.”

So we also asked Cynthia, what are some of the small steps that can help address financial stress? “You help them take small steps by leveraging proven behavioural models and providing targeted, rewards-based action plans. Make sure you cover the fundamentals—like how to budget and the importance of saving for a rainy day. Helping people with the basics makes taking action feel much more doable. And just like with other health issues, you also need to bring in prevention. The idea at first? Let’s focus on getting you out of debt, then let’s start figuring out ways to start saving so you can get ahead of the game. Of course, rewarding people for engaging in these tools doesn’t hurt either.”

Speaking of tools and resources…

Encourage your plan members to check out the new financial well-being modules on the Change4Life portal. And hopefully, your plan members will add financial wellness to their health management goals this year!


1, 4, 8, 9, 14, 23 “Survey: Half of workers say financial stress impacts work performance,” Canadian Payroll Association, November 6, 2017. Retrieved December 2017: and “Here Is When Each Generation Begins and Ends,” According to Facts, Philip Bump, The Atlantic, March 25, 2014. Retrieved December 2017:

2, 18 “Over half of Canadians are $200 or less away from not being able to pay bills,” Erica Alini, Global News, May 8, 2017. Retrieved December 2017:

3 “Canada’s economic growth has come at a price—its debt level is now highest in the developed world,” Geoff Zochodne, The Financial Post, November 23, 2017. Retrieved December 2017:

5 “Canadians’ average debt load now up to $22,081, 3.6% rise since last year, Total consumer debt load now at more than $1.7 trillion,” Pete Evans, CBC News, December 7, 2016. Retrieved December 17, 2017:

6, 15, 16 Initiating budgeting behaviour among non-budgeters: A financial literacy pilot using mobile technology, Marcie McLean-McKay and Josh Leigh-Mossley, Financial Consumer Agency of Canada, Government of Canada website April 2017. Retrieved December 2017:

7 Payday Loans: Market Trends, Financial Consumer Agency of Canada, October 26, 2016. Retrieved December 2017:

10, 17 “Paying down debt remains No. 1 priority for Canadians heading into 2017: CIBC Poll,” Canada Newswire, December 29, 2016. Retrieved December 2017:

11 Pay Day Loans, Financial Consumer Agency of Canada web page, Retrieved December 2017:

12 “Americans in debt trying to project luxe life,” Jessica Dickler, CNBC, April 25, 2016. Retrieved December 2017:
13 2017 CSA Investor Index, Canadian Securities Administrators, November 23, 2017. Retrieved December 2017:

19, 20 “Debt stress affects health, fuels depression,” CBC News, June 2008. Retrieved December 2017:

21 Financial literacy background, Financial Consumer Agency of Canada, Government of Canada website. Retrieved December 2017:

22 2017 CSA Investor Index, Canadian Securities Administrators, November 23, 2017. Retrieved December 2017: