Debt Relief Experts
You know you need to improve your financial health. You might even know what you need to do – save more, spend less, pay down debt. So why does that not necessarily translate into healthy financial habits that move the needle? What’s stopping you from achieving overall financial wellness? That’s the question asked in a recent study by Mercer Canada. The study found that while Canadians have a reasonably high level of financial literacy they aren’t necessarily achieving financial wellness. For example, only 1 in 3 Canadian employees over the age of 50 have a strategy for their retirement. They know they need to save for retirement, they even know what the products are, but they don’t have a strategy to reach their financial freedom goals.
What is the solution then? How do you improve your financial wellness?
Jillian Kennedy is the Employee Financial Wellness Leader at Mercer Canada, a consulting firm that helps employers and organizations package and offer benefits to their employees. On today’s show, Jillian highlights the key findings from the Mercer study and talks about how financial wellness impacts our ability to reach important milestones like buying a new home or saving for retirement.
Table of Contents
What is Financial Wellness?
Jillian defines ‘financial wellness’ as stepping stones, or blocks in which you need to achieve.
She outlines three steps to achieving financial wellness:
- Having control over your day-to-day finances. In other words taking control of managing your money and debt.
- Next create a savings plan to absorb financial shock or to make a purchase of something you need.
- Once you are in control, and have your buffer, then you are in a position to start creating, monitoring and achieving your long term financial goals.
I think what’s important is that you can’t really achieve one without creating the other. You can’t save without understanding your day-to-day and having control over that, and you can’t plan and meet goals without actually being able to have the basic foundation in place.
Financial wellness is about translating what you know you need to achieve into positive actions to improve your financial health. It’s about reaching your findependence. It’s a lot like working to be physically healthy.
We saw the health revolution hit … we counted our steps, we all knew how much sleep we needed to have and how to eat healthy. That didn’t always correlate directly into being healthy.
Financial wellness is more than financial literacy. Literacy is about understanding the concepts you need to manage money – for example how to budget. Financial health is about applying that knowledge so you are able to save, able to meet your financial goals.
And achieving financial wellness is a goal everyone struggles with.
Many people in households making more than $100,000 a year are just as stressed on how to pay their bills and save for retirement than those making far less money.
Debt contributing to low feeling of wellness
And not surprisingly debt sometimes contributes to a lack of financial wellness. The Mercer study found that 39% of Canadians actually have more money going out towards sources of debt than they have coming in. And this affects not only your finances but your worklife.
If they actually are in debt, they’re worrying about debt, they’re stressing about debt, then they don’t want their employer to know, and there is shame, there is embarrassment, and there’s this concept of just making sure that nobody knows about it, and if I don’t think about it, if I don’t get discovered, then maybe this reality won’t actually impact me every single day when I go to work.
Related: Debt happens. Why cause and fault are not the same.
Women have less financial wellness than men
The study also found that women, on average, have a significantly lower level of financial wellness than men. Unlike their male counterparts, the study revealed that women have less confidence in their ability to make financial decisions. Women tend to be out of the workplace more often than men as well, meaning they may not be able to save as much towards retirement. They also live longer, so they need more money for retirement.
Overall, this was definitely something that we found to be a concern, because women are behind right from the beginning but actually need more to be able to retire comfortably.
In our Hoyes Michalos Bankruptcy Study we saw a similar trend, where women are at a higher disadvantage, as women face a higher bankruptcy risk than men.
How employers can help employees with financial wellness
Jillian recommends that if you have any type of wellness or benefit program as an employer, you should focus on creating a communication strategy for it. Think about how to get information to your employees. How would you tell them the value of their benefits and how do you continue to communicate with individuals based on their needs?
So really what employers should be doing is saying, OK, just like I have a communication strategy or an education strategy, I need a financial wellness strategy, and so actually taking a step back… actually trying to take a look at what employees need, maybe doing employee surveys to get the feedback directly from employees. That’s where you start and you create a multi-year road map, or a journey, on how you can best help your employees.
Another interesting find in the survey is that the majority of employees don’t trust financial advice from their employees. Instead, they prefer to talk to their bank.
I think that what happens is that the individual person thinks, okay, my personal finances means bank, I need to deal with the bank, the bank has the money, I need to deal with them, and as long as I have a relationship with them and I trust them I know that they’re looking out for me.
However, according to Jillian, the reality is that it’s just as important to focus on employer provided benefits because there is group buying power and as a result, you could get lower investment fees and more access to better quality investments and advisors who are not biased.
To learn more about what you can do as an employer and as an employee to improve financial wellness, tune in to today’s podcast or read the complete transcription below.
Resources Mentioned in the Show
- Mercer.ca
- Study findings
- How to Find a Credible Financial Planner
- Webinar Replay on Employee Financial Wellness
FULL TRANSCRIPT – SHOW 201 Achieving Financial Wellness
Doug Hoyes: Today on Debt Free in 30 we’re going to discuss a topic we have never discussed before. The reason we have never discussed this topic is that it had never occurred to me that this was a thing. Today’s topic: Financial wellness. Is that the same as financial literacy, or is it something different? Today I’ve got a first time guest who can answer those questions and more, so let’s get started. Who are you, and where do you work?
Jillian Kennedy: My name is Jillian Kennedy and I work at Mercer Canada. My role here is to help individuals with financial wellness, and I lead that across Canada. I have been consulting with employees and customers for almost 20 years.
Doug Hoyes: So what is Mercer?
Jillian Kennedy: Mercer is a global leader in consulting; we focus on talent, health and retirement. We have over 20,000 employees in more than 40 countries around the globe, and the way we work is we partner with, as a team, to provide advice and solutions for our clients, which are really employers or organizations that are trying to package up and offer benefits to their employees.
Doug Hoyes: So that’s cool, we’re going to talk about this then from both the employee and the employer point of view. So the reason I wanted to have you on today is earlier this year Mercer conducted a study on the state of financial wellness for employees in Canada. And I read your report, it’s got some interesting findings, but before we get to that, what exactly is financial wellness? How would you define that?
Jillian Kennedy: Yeah, and that’s a great question because I think financial wellness, depending on who you speak with, will have a different definition. And so the way we think about financial wellness is we think about it as stepping stones, or blocks in which you need to achieve. And so the components of financial wellness is first and foremost to be able to have control, and that’s control over day to day, month to month, or let’s call it necessities of what you need to be able to do to manage your own personal finances.
After that, the next step would be to be able to create some type of savings, to be able to absorb some type of a financial shock or something that you might need. And that makes sense, because you start with control, and then you create a buffer to manage that control. The next thing that we would think for a component of financial wellness is that once you’ve got that control and you’ve got the buffer and you’ve got the savings, then and only then are you in a position where you can actually start to take a look at creating goals, monitoring and achieving those goals.
And that’s when we get to the financial freedom that every individual Canadian wants, and the ability to actually have confidence around financial wellness. And I think what’s important is that you can’t really achieve one without creating the other, you can’t save without understanding your day to day and having control over that, and you can’t plan and meet goals without actually being able to have the basic foundation in place.
Doug Hoyes: And so how is financial wellness different than financial literacy? It sounds like there’s a bit of overlap there.
Jillian Kennedy: Yes, so financial literacy is important to just be able to understand the day to day concepts of being able to manage finances. But I think when we take a look at financial literacy, what’s important to understand is that an individual can be financially literate and still not be able to turn that into action, and so that doesn’t actually achieve financial wellness. And the way I like to think about this is almost when we saw the health revolution hit our marketplace, and we all knew that we- you know, counted our steps, we all knew how much sleep we needed to have and how to eat healthy. That didn’t always correlate directly into being healthy. And that’s how we take a look at financial wellness.
You can understand financial concepts, you might understand how to budget, but does that mean you’re actually applying that behaviour into having that absorption for being able to save, and having goals, and actually being able to meet those goals? And what we’ve found is that most Canadians are financially literate, or at least half are financially literate, but we are not seeing that correlation towards financial wellness.
Doug Hoyes: So there’s a difference between knowing what I should do and actually doing it. Okay, why then did you conduct this study? What were you hoping to find? What was the point of it?
Jillian Kennedy: So first and foremost we were frustrated to find that there was almost no data on Canadians and the population of Canada. We could get data on the west, we could get data on other global countries, but there was nothing on Canada. And we felt that that was really important to understand, because when we take a look at the evolution of our market it’s very, very different; we’re a much smaller market, employees have not had some of the experience with some of the financial wellness providers like they have in other countries. It’s really almost like an immature market that’s looking to grow really quickly.
So we knew we needed to take a step back, just take a look at, okay, what are Canadians thinking? What’s top of mind? And so what we did is we took a look at all of Canada, we took a look at prorating by province so that we had the right population in each of the major areas of our country. We then worked with a third party to create basic behavioural financial wellness questions. This isn’t stuff about: Tell us how much money you have in your bank account. These are behaviour type questions that allow us to understand whether an employee has that level of financial wellness, so things like if you were out of work for three months, or you had a $400 bill that you didn’t expect; questions like that.
And we did focus on areas, we focused on financial knowledge, we did do the global financial literacy test, we took a look at the financial health, we took a look at the trust of the employer, we took a look at the correlation between being healthy and being financially well, and finally we took a look at worry and stress and how that might impact the individual.
Doug Hoyes: So that sounds like about five different areas you were kind of looking at. What did you actually find then? What are some of the takeaways when you did this study?
Jillian Kennedy: Yes, so the first thing that we found when we took a look at worry is that many people in households making more than $100,000 a year are just as stressed on how to pay their bills and save for retirement than those making far less money. And so that was very shocking to us because I think we thought, you know, going into this process there is this kind of myth that if you do well and you have a very large pay check, or you’re making money and maybe you’ve been promoted and you’re high up in the ranks of your employment, that you’re okay and financial wellness is not something that impacts you. But we actually did find that it cuts across all income levels.
And in fact when we took a look, generally speaking, we did find that the percentage of Canadians that don’t feel in control of their financial situation was as high as 34% in some categories. So that was one thing that we looked at.
Doug Hoyes: And why do you think that is? Why is it that somebody making more than $100,000 a year is just as stressed as someone making a lot less? Is it just because, well, they’re spending a lot more trying to keep up with the Joneses, or is that beyond the scope of what you were looking at?
Jillian Kennedy: No, we absolutely did dive into sources of debt. And so whenever you think about worry, confidence, you know, that really, you know, you’ve got to dive into where that could be coming from, and so we did take a look at what are the sources of debt that the average Canadians are dealing with? And we also explored, you know, take things very simply like how much I am making monthly, versus how much debt payments are going out monthly. And one of our most surprising discoveries was that we found about 39% of Canadians actually have more money going out towards sources of debt than they have actually coming in.
Doug Hoyes: Yeah, and that’s a recipe for disaster I would say, because that’s math, you can’t be sending out more than you put in. And that makes perfect sense to me because of course that’s my entire client base, is people who can’t service their debts. So okay, so worrying about finances obviously a big thing, and the key takeaway there, it cuts across all income levels, or even what we would consider high income levels. Now you mentioned when you were talking at the beginning there that employees don’t trust information they get from their employers. Tell me about that.
Jillian Kennedy: Yes, so we did take a look at whether employees trusted different types of sources, and what kind of information and how they want to receive it. We did find that the majority of employees don’t trust the information to come from their employer. Now this doesn’t mean that they don’t like their employer, it doesn’t mean that they’re dissatisfied with their job, and it also has absolutely nothing to do with forms of compensation like how they’re paid and their vacation. But what it means is that when it comes to their own personal financial situation, or even something like their company provided benefit like a retirement savings program, they prefer to be at arm’s length from their employer. And when you take a look at the Canadian market itself, and when you take a look at employers, the reality is that there has been a lot of shifting of cost, employers are no longer able to really cover all of the costs of half of all of their employee base any longer because of the changes to our marketplace.
So that might be one source of why employees are saying, okay, well what’s in it for me and I want to hear that from a third party. But the other side is, is if you actually think about it and the fact that employees, at least 39% of Canadians, that might translate into a very high number of employees within an organization. If they actually are in debt, they’re worrying about debt, they’re stressing about debt, then they don’t want their employer to know, and there is shame, there is embarrassment, and there’s this concept of just making sure that nobody knows about it, and if I don’t think about it, if I don’t get discovered, then maybe this reality won’t actually impact me every single day when I go to work.
So there’s definitely both of those things happening. We did see also that employees do prefer to work with financial advisors, or third parties of some sort to get information, and they also prefer to do it face to face, versus being online or some sort of technology. So that was also interesting for us.
Doug Hoyes: Yeah, and I can see how the world has shifted. 50 years ago you worked for a big company, there was a pension plan, there were health benefits, whatever, and now pension plans are almost not even a thing. So I can see that companies are cutting back, therefore you perhaps have a little bit less trust in them. I mean I’m not surprised that people would want to talk to a financial advisor, I was surprised that in your study you said that people are more likely to trust thing- people like banks, which surprised me. Does that surprise you, or does that make perfect sense to you?
Jillian Kennedy: It makes sense to me, because if you think about the interaction with financial matters you kind of go back and you think about the average person, the very first time they open a bank account it’s with their bank, the very first time they might take a loan it’s with their bank. There are a lot of moments or milestones within someone’s life where they interact with their bank and it starts at a very, very young age. Things like that are inevitable, like mortgages, potentially student loans.
And so I think that what happens is that the individual person thinks, okay, my personal finances means bank, I need to deal with the bank, the bank has the money, I need to deal with them, and as long as I have a relationship with them and I trust them I know that they’re looking out for me. But the reality is that it’s just as important to focus on employer provided benefits, because when we take a look at employer provided benefits you’ve got this group buying power, you’ve got the leverage of employers being able to pull together a large number of people and be able to do things like get lower investment fees, or higher access to better quality investments, or advisors that aren’t biased or charging really, really high fees for that advice.
So I think, as Canadians, we think about our company provided benefits as being completely separate and distinct from our personal finances. And so I think one thing that we do need to do better as a marketplace is start trying to figure how to bridge that for employees.
Doug Hoyes: That’s a very interesting point. Now I guess as an employee – you already mentioned it – the whole area of retirement and retirement plans and things like that, what did your study find with respect to our readiness for retirement? Are we all saving money, it’s all going to be good, or not so much?
Jillian Kennedy: Yes, so great question. I mean I think what we found, you know, we’ve seen a lot of information around retirement readiness, and this has definitely become a very important thing to talk about. And what we actually found is that the percentage of Canadian employees who are over 50, that have a strategy for managing and spending their retirement savings plans, was extremely low. And that definitely was something that wasn’t that big of a surprise, because we do see a lot of statistics right now about people potentially having to delay retirement, or potentially having to work in retirement.
But what did surprise us is that the individuals weren’t creating a retirement plan because they didn’t understand the amount of money they needed to retire on, it was more along the lines of the comfort and behaviour around how do I transition into retirement? How do I go from one day working to no longer working, and completely being dependent on the pot of money that’s I have tried to save? And the interesting thing is that those who had low financial wellness, so those who were stuck at that step of just figuring out their day to day were the most impacted, those were the individuals that hadn’t even thought about retirement and potentially would even go into retirement with having not even thought about how much they need to save at all.
But the higher the financial wellness, and if you think about this this makes sense, because to achieve ultimate financial wellness you need to be able to set a goal, track a goal, and achieve it. And that’s exactly what retirement is. It’s a long-term goal but you have little milestones along the way to see if you’re tracking that success. And so that to us was the most surprising, is that individuals are just not financially well enough to actually have a plan that can deliver what they expect in retirement.
Doug Hoyes: Yeah, and that kind of makes sense, if I am having trouble with my day to day I am certainly not thinking about 20 years from now. So obviously you’d have problems in the future. Now it’s kind of common knowledge that if you have stress in your life it affects lots of different areas of your life, so if you’ve got financial stress it affects physical health. Is that true? Did you find any evidence of that in your study?
Jillian Kennedy: We did. We actually found the more stressed employees were the more correlation there was to a financial matter. And if you think about this, the average Canadian we found it was actually worrying about six hours a month in their workplace. So I’m sure there was other time spent outside of their workplace just worrying about financial matters. You know, you wake up and it’s like it’s on your mind, you go to sleep it’s on your mind, it’s a burden that you carry with you. And that amount of stress means that you’re not as likely to think about things proactively for your health. And that was very interesting to us.
So if I am struggling with debt, or I am struggling with trying to meet some type of financial goal that is really important to me and I’m not able to do that, then I am not thinking about sleeping, I’m not thinking about eating well, I’m not thinking about exercising, because my entire moment of being is taken up with focusing on debt and how to manage that debt. Now we also think that over time that that stress rose on the physical health of individuals, and so it will lead to higher levels of potential mental or emotional stress for employees. It might mean higher levels of things like heart attacks, and things that are associated with stress.
And so there is this domino effect of just having that day to day stress, how it impacts how I am proactive about my health, and then the long-term effects.
Doug Hoyes: Is it a chicken and an egg thing, that one leads to the other, or is it more of a feedback loop, that one thing makes the other thing worse which makes the other thing worse? In other words, is it financial stress that leads to the physical issues, or is it the physical health issues that lead to the financial stress? Or is it really just one leads to the other over and over and over in a feedback loop?
Jillian Kennedy: Yeah, I mean I am sure that every individual situation could be different, so I am sure there are definitely situations where there is a feedback loop. So you are financially well, something happens to you physically that doesn’t allow you to have the same type of lifestyle, and all of a sudden you’re getting yourself into debt and it gets worse and worse. But I think the interesting thing is, you know, again we’re able to take a look at those who were financially well, what does their health look like? And we actually found that those who had medium to high financial wellness, actually 81% of them said that they felt that they were in excellent or good physical health.
Now on the low financial wellness side it was at 39%. And so there is something to be said about having a control or getting ahead of something, and feeling like you can at least have one area or component of your lifestyle that you have confidence in. And so we think financial wellness and having healthy financial wellness actually can lead to a healthier lifestyle.
Doug Hoyes: Which kind of makes sense. So you said that when you did this study you kind of sliced and diced it many different ways, looking at different geography and provinces and so on. Did you look at differences between males and females, and if so, is there any difference in terms of financial wellness?
Jillian Kennedy: Yes, so when we took the data we didn’t just take the data as two dimensional data, we tried to create mathematical correlations to see if this behaviour happened what it would do to this behaviour. So we tried to make it more three dimensional. And then the other thing we did absolutely want to focus on is gender, because gender is definitely something that we discuss a lot right now, and it’s something that impacts individuals differently.
And we did find that women, on average, have a significantly lower level of financial wellness compared to their male counterparts. And those areas were areas of confidence, so not having enough savings at all, not having enough confidence to start to think about how to save., definitely higher levels of stress and more time worrying. And then finally, overall, just not feeling like they were able to get to where they need to be to be able to retire comfortably.
And this is all compounded by the fact that, you know, women tend to be out of the workplace more than their male counterparts, which means they might not be able to save as much towards retirement. They tend to be very conservative in how they invest, so they can’t really get that bump of extra returns or to take- you know, they don’t take risks in the market like their male counterparts. And then finally, they live longer, and so they actually need more retirement savings. And so overall this was definitely something that we found to be a concern, because women are behind right from the beginning but actually need more to be able to retire comfortably.
Doug Hoyes: Wow. So I guess my final group of questions are, so what do we do about it? So I mean you already threw some stats out there, 39% of respondents said that their total monthly loan payment is more than their take home pay. So clearly that’s a problem. And I guess in a lot of cases that’s why they come and see me and we do a proposal or bankruptcy and get rid of their debt, because mathematically that’s all that can happen. I mean you said 51% are stressed by financial matters, and you said that it appears that financial literacy levels are high but that knowledge is not translating into action. So it’s kind of like, well I know I should eat healthy food and exercise, but I don’t do it and as a result I’m not in good physical health. Well it’s kind of the same financially, I guess, we know what we should do or at least have a pretty good idea of what we should do but we don’t do it. So why is that then? Is there anything you can put your finger on as to why we know what we should do but don’t do it?
Jillian Kennedy: Yes, so I think one of the problems is that we are starting to be flooded with solutions in our market. So if you’re not financially well, no big deal, go talk to an advisor. Well, but if I’m not comfortable with my finances, and I talk to somebody who is advising me at a level I don’t understand, then that’s not going to be helpful. And I could give you many, many examples of solutions that exist in our marketplace, but employees and individuals just don’t access it because they’re paralyzed.
And so what we’ve done, and what we’ve been talking about, is you’ve got to go in baby steps, but what you need to do is you need to be strategic about it. And so we’ve actually created what we call a Financial Wellness Index, and it’s a way of benchmarking or testing to see, where are your gaps? Where are your challenges? Maybe you actually are really financially literate and you didn’t know that, and because of that you can actually create an opportunity of taking those skills and thinking about how to deploy them. Maybe your gap is that you don’t have a retirement strategy, and so that retirement strategy is something that can easily be accessed through your financial planner; now you know what to ask for, now you know where your gap is.
So there is definitely a need to take a step back and actually evaluate, and you can evaluate, individuals can evaluate themselves personally, or companies and employers could take a look at all of their employee population and try to evaluate on aggregate for trends within that population and try to be a little bit more predictive on potentially what those future needs will be. So Mercer has created something that will help employers do that, and will continue to look for ways to help individuals do that. And so that strategy will understand your challenge, you understand your vulnerabilities, and you understand where you’re doing a really great job. And so that is definitely where to start, to understand where you gain that access.
Doug Hoyes: So if employers are listening to this, and most of the people listening, I assume, are employees, we can talk about them last. But if employers are listening to this, what’s your general overall advice to employers? Because you said – and tell me if I am misquoting you here – but “it’s not uncommon for workers to be spending six hours per month at work worrying about their money”. So that can’t be good for business, that’s not very productive if people are sitting there worrying about their money. So as an employer, what advice would you give an employer to help improve the financial wellness of their employees? Is it as simple as, well, you better increase your pension plan, or is it more nuanced than that?
Jillian Kennedy: It’s more nuanced than that because what ends up happening- so I mean if you have any type of a group benefit program as an employer you’ve got strategies in place. And I think the most common strategy – every employer would be saying, yes I have that – would be a communication strategy. Right, so how do you get information to employees? How do you tell them about the value of their benefits, and how do you continue to communicate with individuals based on their needs? And so really what employers should be doing is saying, okay, just like I have a communication strategy or an education strategy, I need a financial wellness strategy, and so actually taking a step back. We’ve got tons and tons of data at employers, we’ve got health data, we’ve got retirement data, we’ve got workforce data. There’s taking that data and actually trying to take a look at what employees need, maybe doing employee surveys to get the feedback directly from employees. That’s where you start and you create a multi-year roadmap, or a journey, on how you can best help your employees. So that’s really what employers should be doing.
Doug Hoyes: Yeah, and that makes sense. Like you say, you’ve got to take a step back and do that. And so if you’re an employee, I guess obviously you want to be encouraging your employer to help out with these kinds of things, but is there anything else as an employee that you can do to improve your own financial wellness?
Jillian Kennedy: Yes, so I think as an employee, as an individual person, it really is no different than if [you’re an] employer, or obviously employers have the ability to do things on aggregate and roll things out proactively. But I think the most important thing for an individual person is to say, okay, where am I at in the spectrum of financial wellness? Am I stuck at step one trying to figure out my day to day and monthly? Am I actually? You know, and if so, you know that plan that I put together three years ago, I bet you it’s out of date, or it’s something that makes sense why I can’t understand exactly where to take that. So every individual person should do an assessment, and there are many tools out there to be able to do that, and it shouldn’t just be about retirement, it should be about your entire personal financial picture.
On top of that there is a lot of technology that’s starting to come into our marketplace that will help employees or the average individual person kind of understand, so if I’m having trouble with my day-to-day I can figure out how to budget better, I can talk to somebody about, you know, how to set aside money and save that’s within my budget, I can find a way to do something that maybe not now, but maybe later. And if I’m at the point where I can do that, then I find a way to save better. So there’s a lot of technology out there that’s very useful, that’s very proactive, that an individual can use, very much like the things that we all kind of walk around sometimes on our wrist to count our steps. Right, it’s about feedback; it’s about understanding personally where I’m at and how to take myself to the next level.
Doug Hoyes: Certainly lots to think about. I really appreciate you being here today, Jillian.
Jillian Kennedy: My pleasure.
Doug Hoyes: Great, thank you very much.
Jillian Kennedy: Thank you.
Doug Hoyes: That was my discussion with Jillian Kennedy from Mercer Canada, discussing the concept of financial wellness. As Jillian said, financial literacy is the ability to understand how money works. Financial wellness involves taking that financial knowledge and turning it into action. Jillian explained that financial wellness is a series of steps. It starts with control over your financial situation so that you’re covering the basic necessities. Once you achieve that, you begin to create savings to give yourself a buffer so that you can absorb the inevitable financial shocks that happen in life, like a job loss or illness. Then you move on to setting your future goals and you work towards the final stage of financial wellness, which is financial freedom.
That all sounds great, but as Jillian said, 39% of respondents to their financial wellness survey said that their total monthly debt payments are more than their take-home pay, so it’s impossible to get to the savings stage if you’re using more than all of your pay check just to service your debt. Obviously for people burdened with debt, they either need to increase their income, reduce their expenses to free up cash flow, or, if that’s not possible, file a consumer proposal or bankruptcy to permanently eliminate their debts.
Jillian also said that 51% of employees are stressed by financial matters and they spend six hours per month at work worrying about money. That doesn’t surprise me because I know that we get a lot of phone calls to the Hoyes Michalos 310-PLAN helpline during normal working hours, particularly on a Monday, and it’s people calling from work worried about how to deal with their debts.
So what’s the solution? There are lots of potential solutions, but as Jillian says, we are often flooded with options and we don’t know where to start. If you have hundreds of options where do you start? Jillian’s advice is to take a step back and ask yourself: Where is the gap? Where am I at? If my problem is a lack of knowledge, start doing research. If I think I need to make a budget and I don’t know how, there are lots of online resources to help with that. If you have an employer that offers an EAP program or other assistance, that’s a good place to start, although I was surprised to learn that employees in general don’t trust financial information and advice from their employers. It’s not that they don’t like their employer; it’s more that they don’t want to bring their personal problems into the workplace.
So, reach out for help, whether it’s through your employer or an independent financial advisor. I had Jason Heath on the podcast three episodes ago talking about advice from a certified financial planner, so that’s an option. And listeners to this podcast know that we have tons of free resources on our website at Hoyes dot com. Help is out there, but you have to take the first step and ask for help.
That’s our show for today. As always, a full transcript can be found at Hoyes dot com, that’s h-o-y-e-s dot-com, and on the show notes page I’ll put links to Jillian’s company’s website, Mercer.ca, and links to other resources to help you improve your financial wellness.
Thanks for listening. Until next week, I’m Doug Hoyes and that was Debt Free in 30.
