‘Employers can no longer assume that financial wellbeing is tied to salary’
How much a worker earns does not necessarily correlate to financial wellness, according to a study from the Canadian Payroll Association (CPA) and the Western-Laurier Financial Data Analytics Laboratory (The Western-Laurier Lab).
While 50 per cent of those with a household income of less than $50,000 are worried about their financial fitness, 20 per cent of those with a household income of at least $150,000 are also financially stressed.
Fifty per cent of those who are financially stressed are older than 40, and 25 per cent of have reached the half-century mark.
“Employers need to pay attention to these findings because financial stress costs the Canadian economy nearly $16 billion in lost productivity each year,” says Peter Tzanetakis, CPA president. “Employers can no longer assume that financial wellbeing is tied to salary or any generations’ predispositions.”
The study used 11 years of CPA national payroll week survey data, totalling more than 35,000 unique responses, while 4,285 employees from across Canada responded to an online survey between April 24, and June 18.
Canadians belong to one of three groups divided roughly into thirds, said the study Learning about Financial Well-Being in Canada: those who are financially stressed, financially coping or financially comfortable.
Those in the financially comfortable cluster are able to manage missing a paycheque, tend to save money and prioritize work-life balance over salary.
But Canadians who are financially stressed:
• find it difficult to manage a brief financial setback
• save little to none of their income
• place greater emphasis on salary
• spend as much or more than their net pay
• are the most heavily indebted, with the highest likelihood to have car loans, student loans, outstanding balances on their line of credit and credit card debt, and
• report that their debt load increased over the previous year.
The ability of Canadians to deal with brief financial setbacks, such as missing a paycheque, and their savings habits, are two of the main indicators of financial stress, found the report.
“What makes the analysis particularly compelling is the fact that it removes any preconceived ideas or unconscious biases that might impact results and, instead, takes only the similarity of respondent answers to the survey into account,” says Adam Metzler, associate professor of mathematics at Wilfrid Laurier University and co-author of the study.
Canadian workers are spending about two hours every day worrying about finances, according to another survey from Scotiabank, which pegged the 18- to 35-year-old cohort as the most worrisome.