How Can Canadians Achieve Financial Wellbeing?
The report defines three categories of financial well-being into which Canadians generally fall: the financially comfortable, the financially coping, and the financially stressed.
“Where someone falls on this spectrum depends on a variety of factors, but savings habits, spending and debt seem particularly predictive,” said Adam Metzler, associate professor at Laurier University.
While each group is different, the casual and coping categories share more common characteristics. The difference between the coping and stressed categories is 6.5 times larger than the difference between comfortable and coping, making it difficult to transition into a financially tight situation at home. And while research shows that making more money can help, it is not necessarily related to better financial well-being.
“Because savings, spending, and debt are so intertwined, it may be impossible for us to fully understand financial well-being by studying them separately,” Metzler said. “Improving these habits, and moving to a more ‘comfortable’ cluster, is far from simple.”
Metzler noted that financial well-being can be influenced by external factors such as housing costs, which can throw Canada’s financial well-being out of balance. This is especially true given the current real estate boom, where many people are taking advantage of low interest rates and the ability to buy from afar.