We spend, we worry about money, we spend some more. Why do we do this to ourselves?
A recent survey of 5,200 people by a financial services consulting firm has uncovered a staggering level of repressed financial stress. Forty-seven per cent of participants agreed that money worries cause them extreme emotional stress, and 40 per cent said money worries cause them to lose sleep. Only about half of money worriers are talking about their problems with others.
"We were shocked, to be honest, at the levels of stress," said Eloise Duncan, principal at Seymour Management Consulting, which commissioned the study to support its Financial Health Index.
To some extent, this stress is driven by uncertain economic conditions in recent years. Pay raises have been modest or non-existent for many workers, and more people have temporary or contract jobs that provide an unstable income. But some financial stress is self-inflicted. Spending and borrowing keep rising, even as four in 10 people are losing sleep over money.
Expensive restaurants have waiting lists lasting weeks or months. The entire Canadian auto industry is heading for another sales record in 2017, with luxury car companies leading the way. Audi, Bentley, Cadillac, Jaguar, Lexus, Maserati, Mercedes and Porsche were all up at least 12 per cent in sales for the year through Oct. 31, according to GoodCarBadCar.net.
We're also spending large on houses. Not every market in the country is hot, but the most recent sales numbers show prices rising in cities across the country. In the two most expensive cities, Vancouver and Toronto, prices in October were up 12.4 per cent and 9.7 per cent, respectively on a year-over-year basis. Meanwhile, a survey issued by Toronto-Dominion Bank in September found that 56 per cent of participants were willing to go as much as $50,000 overbudget when buying a home.
The study on financial stress included Canadians aged 18 to 70 in all provinces but Quebec and was completed in March and April. Among the survey's lowlights:
- Low-income people were most stressed, but one in three people with incomes of $100,000 or more were on the list of worriers.
- Women are more financially stressed than men.
- Of the people who have occasionally or often worried about money in the past 12 months, 73 per cent stressed about not having enough money saved for retirement, 71 per cent worried about having enough money to cover a surprise expense and 69 per cent worried about having enough money left at month’s end to save.
- Young adults aged 18 to 34 are the most financially stressed group, while boomers feel the least stress.
- Thirty-three per cent of participants were both unsatisfied with their current financial situation or extremely stressed about their financial obligations.
- Twenty-seven per cent are not able to save any portion of their monthly income.
- Twenty-six per cent felt worse off financially than they were a year earlier.
Participants in the survey were asked to rank their happiness in connection with six components of overall wellness: financial, emotional and physical well-being, satisfaction with work, relationships with friends and family and feeling connected to neighbours and community. People were least happy about their connection to community, while financial wellbeing ranked next on the unhappiness scale.
Anxiety about money is an invisible problem. It's not on anyone's radar because default rates on mortgages and credit cards are low and the economy seems fairly healthy just now. Also, whether it's because of a sense of shame or politeness, almost no one talks about money problems.
Let's fix that. If you're stressed about debt, try talking to someone at a non-profit debt counselling agency. If you're worried you don't have enough money to retire, buy a consultation with a financial planner. Ask a trusted family member or friend for help, or contact me. In my e-mail newsletter, I recently got some advice from a credit counsellor for a reader with an impulsive shopping problem (subscribe to the Carrick on Money newsletter.).
Finally, help yourself. Money worries often stem from overspending, which is a fixable problem. Just dial it back on the cars, restaurant meals and other spending you can't really afford.
Rob Carrick