The bottom line: It’s time for Canada to pay attention to financial stress

Peter Tzanetakis, President, Canadian Payroll Association

November 21, 2019

By Peter Tzanetakis, President, The Canadian Payroll Association

Here’s the truth: workers across Canada are focused on the bottom line… but I’m not talking about the expenses and revenues of their employers or organizations. They’re actually worried about their personal bottom line. 

No matter where Canadians live or work (or, for that matter, their salary), paying for the rising costs of living — the mortgage, groceries, supporting a child’s dreams, and hopefully saving for retirement — is fueling people’s financial stress. 

In fact, finances are the number 1 source of stress for Canadians — more than death, family or divorce — and the problem seems to be growing.Footnote 1  The recently released National Payroll Week Survey of Working Canadians found that 43% of Canadians are still living paycheque to paycheque, and 1 out of 3 are more in debt now than they were in 2018.Footnote 2   

Meanwhile, retirement, which creeps closer every day, is an idea filled with more questions than answers for the approximately 75% of workers who have saved less than 25% of their retirement target.Footnote 2 

These aren’t inconsequential concerns. For the 40% of Canadians who say they are overwhelmed by financial stress, “leaving it behind at home” is impossible.Footnote 2 They carry the weight of financial stress everywhere. That includes into the workplace, where 25% of workers say they spend nearly 40 minutes a day distracted by their personal finances. A full 43% are so financially stressed that they admit their performance at work is suffering as a result.Footnote 2 

For employers, the subsequent loss in productivity adds up to $16 billion every single year!  Additional losses due to increased absenteeism and decreased employee engagement only add to that tangible business impact.Footnote 2 

The bottom line is this: Canadian workers are financially stressed out, and the time is now for employers everywhere to step up and become champions for financial wellness.

Canadian payroll professionals have the power, knowledge and expertise to help employers do just that. Payroll professionals can support the financial wellness of working Canadians and limit the negative impact of financial stress on employers by leading the implementation of a Pay Yourself First Program.

When fully supported by management, a Pay Yourself First Program is easy to set up and allows for individual employees to work with payroll to arrange for even a small portion of their paycheque to be automatically deposited into a separate savings account. This encourages better money management and the steady accumulation of savings or retirement funds.

For employers, empowering payroll staff to implement a Pay Yourself Program requires (at most) a minimal investment and can more than likely be easily integrated into their current payroll platform. Taking into account the significant costs of doing nothing, there’s no reason that the percentage of businesses currently offering such a program (55%) can’t reach near to 100%.Footnote 2 

Similarly, working Canadians shouldn’t hesitate to talk to their colleagues in payroll. Not only can a payroll professional help you understand the different parts of your paystub, they can more than likely set up automatic savings even in the absence of a formal organizational program. 

Beyond what payroll can do, everyone needs to be more proactive when it comes to managing finances. Less than half of those we surveyed – and remember, nearly half are living paycheque to paycheque – actually make a budget. Of those who DO make a personal budget, 30% admit that they only do so in their head. That’s simply not going to get it done. When you make a budget, you’re less likely to spend more than you earn and, as a consequence, less likely to face the spectre of mounting debt. There are plenty of free budget planners and tools that can be found online, including from the Financial Consumer Agency of Canada. 

In light of these findings, it’s not surprising that employees from coast-to-coast-to-coast are looking to their employers for help on improving their financial literacy. Nearly 4 out of 5 (78%) indicated they would be interested in financial education offered at the workplace, with saving for the future and better budgeting being the 2 most popular topics.Footnote 2   

Fortunately, employers have resources at their disposal to help employees strengthen their financial literacy. For example, they can refer to FCAC’s Financial wellness in the workplace web resource for ‘best practice’ strategies and tools to help build employee-focused financial wellness programs.

The bottom line is this: Canadians are burdened by financial stress, but it doesn’t have to be that way. Employers and employees (with support from their payroll departments) have the capacity to make things better, reap the rewards of improved financial wellness today, and turn working Canadians into savers!

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