Fewer Canadians say they are financially comfortable since 2021

Research by the National Payroll Institute and Canada’s Financial Wellness Lab shows “several signs that our financial situation is worsening”.

Canadians’ financial well-being “has fallen sharply” over the past year with rising inflation and a reopening of travel and other expenses that eased for many workers during the pandemic.

That’s according to research from the National Payroll Institute and Canada’s Financial Wellness Lab, which indicates that salary living wages have jumped 26 percent since 2021.

“Many Canadians feel vulnerable, and the ability to change their financial situation is still beyond their control,” Matt Davison, director of the Financial Health Laboratory and dean of science at Western University, said in a news release Tuesday.

The National Payroll Institute’s annual survey of working Canadians reached 3,033 full-time workers between June 7 and July 15. The Financial Wellness Lab divided these responses into three groups—financially comfortable, coping or stressful.

With interest rates rising and inflation continuing to be a problem, this trend is likely to continue.Peter Tzanitakis, President of the National Salary Institute

The research showed “numerous indications that our financial situation is worsening,” according to its authors.

In 2021, the “comfortable” group represented 46 percent of respondents. That category is down 10 percent this year, increasing the “acclimatizing” and “stressful” groups by eight percent and 2 percent, respectively.

“While the growth of coping and stress groups shows that more Canadians are struggling financially as we emerge from the pandemic economy, the data suggests that things are likely to become more difficult for more people in the near future,” said Peter Tzanitakis, president of the National Salaries Institute, added in the statement.

“Saving and spending habits, along with dependence on debt, have continually determined which group an individual belongs to, and each is moving in the wrong direction. As interest rates rise and inflation persists, this trend is likely to continue.”

The research also revealed a widening gap between the ‘coping’ and ‘stress’ groups. The report says this shows an increased level of distress among those who suffer the most financially.

Inflation and the rising cost of living were found to be top economic concerns (85 percent) among those surveyed, with many concerned about spending on food and transportation. 18 percent said they used debt to pay necessities in 2022, and that rose to 61 percent in the financially “stressed” group.

The number of Canadians spending more than their net pay reached 11 percent, the highest level ever recorded by this survey. For those in the “stressed” group, 91 percent said they spent more than their net pay, up from 82 percent in 2021.

At the same time, the number of respondents who said they save from just one to five percent of their salary jumped to 34 percent, from 27 percent last year. Nine percent say they don’t save anything, and 84 percent of “exhausted” individuals say they save less than five percent of their salary, up from 76 percent in 2021.

Jeff Lagerquist is a Senior Reporter at Yahoo Finance Canada. Follow him on Twitter Tweet embed.

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