4 in 10 Canadians struggle with finances

Four in 10 Canadians are struggling with some — or all — of their finances, according to the TD Financial Health Index.

Presented on Oct. 29, the index previewed a picture of Canadians’ financial well-being by enrolling more than 10,000 respondents on how they spend, save, borrow and plan and assigning them a financial health score. Those with scores of 0-39 were considered financially vulnerable, while those with varying from 40-59 and 60-79 were considered “financially coping,” at a low and high level, respectively. The ones from 80-100 were regarded as financially healthy.

The study showed that just over a quarter of Canadians are “financially healthy, fortifying the need to significantly enhance financial education to arm Canadians with the knowledge and actions they need to overcome their current challenges.

The Financial Health Index is a product of six indicators:

• Household Income
• Neighborhood Poverty
• Liquid Assets
• Real Estate Assets
• Consumer Debt
• Mortgage Debt.

According to the report, income alone is not the sole driver of financial health and traditional definitions of poverty do not provide an accurate picture of the current financial state of Canadian households.

An individual can be financially vulnerable despite having a higher income and low debt, as the two do not necessarily equate to having good financial health. The study showed most Canadians are not even confident that they are on the right track to meet their long-term financial goals, and 62 per cent are unaware of what help is available.

The financially vulnerable tend to manage their finances themselves and don’t seek any help to learn about financial products and services, whereas the financially healthy are more likely to invest in financial advisors, online resources, and information sessions.

“Most Canadians are still unsure about what to do, where to turn and even what questions to ask when it comes to seeking financial advice and information,” said Teri Currie, group head of Canadian personal banking at TD.

About 18 percent of individuals with a high annual income have below-par financial health.

“Asking for help when it comes to money is a critical step towards financial confidence,” said Rina DeGrazia, vice president of financial education for TD. “Let’s remove the stigma around money conversations and tell Canadians that there are no dumb questions when it comes to your finances.”

When it comes to financial health, Quebec is the healthiest province with a score of 67.1 out of 100, and Alberta is second healthiest with a score of 61.5 out of 100. People living in cities have higher financial health as compared to people living in rural areas.

Windsor and Kitchener-Waterloo have the lowest financial health standing, with 57.1 and 59.6 out of 100, respectively.