The road to financial resilience

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It’s been nearly three years since the onset of the global pandemic, yet it continues to have a profound impact on our lives today – including our finances. For some Canadians, the financial impact of COVID-19 was positive: lockdowns led to cancelled travel plans and a big drop in spending, leading to many months of forced savings. For others – especially those whose income was affected by the pandemic – budgets were stretched to their limits and savings were depleted.

Regardless of whether you were better off or struggled during the pandemic, research is now telling us that in the past year, the financial resilience of Canadians overall has decreased. Inflation, higher interest rates and increased housing costs are impacting many of us, but there are steps Canadians can take to enhance their financial resilience.

Although it’s common to feel alone when it comes to the financial challenges you’re facing, it’s important to remember that there are professionals out there who are ready to help. Certified Financial Planner professionals and Qualified Associate Financial Planner professionals help their clients achieve financial resilience every day.

What is financial resilience?

The Financial Resilience Institute defines household financial resilience as a “household’s ability to get through financial hardship, stressors and shocks as a result of unplanned life events,” measured through its Seymour Financial Resilience Index™.

This Index measures financial resilience using indicators such as having household savings, stress levels related to financial obligations and debt management. Based on these and other indicators, Canadians are scored from 0 to 100 in terms of their household’s financial resilience.

Financial vulnerability in Canada is increasing

In June 2022, the mean financial resilience score in Canada was 50.52, down five points from 55.67 in June 2021. The June 2022 Index also revealed the number of Canadian households considered to be financially resilient (with a financial resilience score of 70.01 to 100) dropped significantly from 31.1% in June 2021 to 22.2% in June 2022. This drop partly reflects the fact that more Canadians now need to spend more of their household income compared to a year earlier, due to the rising cost of living.

The Index also highlights the growing financial vulnerability for many households. For example, living paycheque to paycheque is an unfortunate reality for many Canadians. As of June 2022, nearly one-third (28%) of Canadians reported having a household savings buffer of less than three weeks.

This statistic shows just how many Canadians are facing financial insecurity. Rising inflation and high interest rates are only adding pressure to an already difficult situation, and higher debt-servicing costs on mortgage payments, credit cards and other loans leave households with less money for other essentials.

A professional in your corner

Building financial resilience may seem daunting, particularly in today’s economic climate. Fortunately, Canadians do not need to face these challenges alone, as there are professionals who can help.

CFP professionals and QAFP professionals undergo a rigorous certification process to develop the experience, knowledge and skills required to properly support Canadians. With a professional in your corner, you can work together to build a personalized financial plan that prepares you to withstand even the most unexpected challenges that life brings.

Research clearly shows the benefits of partnering with a financial planner. FP Canada’s 2022 Financial Stress Index found that money was not a source of stress for the majority (71%) of Canadians who work with a planner. For Canadians who do not use a planner, this number dropped to 43%.

No matter your age, income, gender or ethnic background, all Canadians can benefit from the holistic advice of a CFP professional or QAFP professional. From managing debt and planning for retirement, to guidance on taxes and investing, they offer personalized support for your unique situation. And, since they’re held to a rigorous set of standards and a code of ethics, a CFP professional and QAFP professional will always act in your best interest.

While we can’t prevent occasional setbacks and challenges in life, by partnering with the right professional, you can build the financial resilience you need to stay on track towards your goals.

Visit findyourplanner.ca to get started today.

Advertising feature produced by Randall Anthony Communications with FP Canada. The Globe’s editorial department was not involved.