Canadians are facing financial pressures
According to the data, Canadians are still under significant financial pressure, with as many as 68% expressing concern about the cost of living. Nearly a third (30%) of respondents worry about money, especially women and those earning less than €50,000 a year, while Generation X worries about their retirement.
Compounding the problem is that monetary insecurity has a notable effect on the way Canadians spend. Forty-two percent said they would rely more on credit than cash this year, an increase of 7% from last year. In addition, 48% have debt and 59% have more debt than last year. More than half (52%) pay off only slightly more than the minimum amount due, resulting in higher balances – and less resilience for Canadians.
Debts are normalized
High costs of living and credit utilization aren’t new, but consider this: almost half of Canadians (45%) said they feel “about the same” about their finances. Credit experts say this could be a problem.
“[I]It appears that almost half of respondents rate their feelings about their financial situation as neutral compared to last year – in other words, they feel numb to it,” said Peta Wales, president and CEO of the Credit Counseling Society in a press release. “Debt continues to be a source of stress and anxiety, and persistent financial pressure can cause individuals to become resistant to change, even as their balances continue to rise.”
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A comprehensive guide for Canadians
Financial paralysis is a term used in the financial world to describe the effect of money stress on some people. Signs include avoidance, inaction and shutting down – or numbness. In this state, simple financial tasks such as using a budget, paying bills, or even checking accounts can seem out of reach. Worse yet, a person may overspend to compensate for negative feelings or out of a sense of helplessness. The main solution – building a solid financial foundation – is a laughable suggestion to someone who has become numb.
Take out
There is no silver bullet for financial paralysis, but there are actionable strategies you can use to put yourself in a position of strength. That’s important, because research suggests that, like compound interest, wins build on wins.
Change your mind
“Just as we learn language, customs and social norms from the culture around us, we also absorb messages about money,” writes Nathan Astle in Psychology today. Cultural money taboos make it difficult to talk about finances, and any perceived failure manifests as guilt and shame.
If you want to find financial (and emotional) stability, it’s worth seeking help in this area. Therapists, peers, and support groups can help you untangle your feelings about money, while a financial advisor or credit counselor can put your portfolio into perspective.
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Change your habits
Although annoying, some money habits just work. Set a realistic budget (and stick to it). Prioritize paying off your debts. Build an emergency fund.
Change your timeline
You just want a lifeline when you’re in debt. You feel impatient because it’s uncomfortable, and because you owe even more every month.
The truth is that paying off debt is a long-term project and you’ll be better off if you have a realistic idea of what it will take.
Debt not only drains your bank account, but also freezes your decisions. The stress and shame can make avoidance feel safer than taking action, but doing nothing only deepens the fall. Fortunately, there are ways to get moving again. Face the numbers, make a plan, act consistently and ask for the help you need.
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