Another recent study is telling an all too familiar message for many Canadians. Most are likely to address financial difficulties by taking out a loan or selling assets rather than focus on taking the appropriate action to properly eliminate their debt once and for all. For those who don't have good credit, taking on even more debt via predatory loan company's can be a crippling move towards their hope of any state of future debt clearance.
Conducted by the firm Bromwich+Smith’s, phase 2 of their Perfect Storm study posed the question "What actions would (you) take in order to find relief from financial difficulty?” to over 1500 respondents. The main results were as follows:
What actions would you take to find relief from financial difficulty this year? | Total | 18 -34 | 35 - 54 | 55+ |
Taking out a loan/new line of credit from a bank or other financial institution | 39% | 41% | 42% | 34% |
Selling investments/financial assets | 33% | 35% | 31% | 34% |
Borrowing from family or friend | 27% | 50% | 29% | 8% |
Downsizing my living situation (e.g., moving to a cheaper rental unit, moving in with roommates/family, etc.) | 19% | 30% | 17% | 13% |
Selling my home | 16% | 8% | 15% | 22% |
Borrowing from my partner/spouse Consulting with a debt professional (such as a Licensed Insolvency Trustee) | 12% | 19% | 13% | 6% |
Consulting with a debt professional (such as a Licensed Insolvency Trustee) | 11% | 13% | 13% | 7% |
Seeking advice about a bankruptcy or consumer proposal | 7% | 6% | 9% | 5% |
Declare bankruptcy or filing a consumer proposal | 5% | 4% | 8% | 4% |
The results of the survey show that financial wellness priorities are still misplaced by most people. Financial literacy in general is low and it needs to be dramatically improved within the majority of the population. “Faced with financial literacy it seems Canadians dealing with debt
are focused on changing the address of their creditor rather than reducing their debt."says Laurie Campbell, director of client financial wellness at Bromwich + Smith.
As an additional part of the survey respondents were also asked to rank their top financial priorities for 2022.
55% having a sufficient emergency fund
46% paying down debt
37% saving for retirement
27% saving for travel/vacation
19% saving to renovate their home
15% changing jobs/finding a job
15% saving up to buy a home
13% improving their credit score
12% saving for their children's education
7% having enough insurance to cover their family
These additional responses clearly show there is still a significant disconnect between the priority to pay down debt and the reality needed to actually address the debt level.
From all of this one key question resonates. What can be done to change this situation. A response becoming more and more popular is for employers to start taking on some of the responsibility to better educate their employees around financial wellness and they don't need to do it alone. Many can look to partnerships with third-party financial wellness companies like Benefi that can provide employees with both financial education and functional tools and services to help them better manage their own money, get out of debt or improve their credit rating.
The Benefi Financial Wellness Platform is the 1st FREE employer program that empowers an entire workforce to become financially stable and aware. It's comprised of 3 primary components of support:
A Better Way to Borrow - Affordable loan rates are now available to employees directly through Benefi. If they need to pay off credit cards or payday loans or simply need extra finances for an emergency they now have a better borrowing option. The loan repayments are deducted straight from a paycheque so there's never a worry about missing a payment.
A Better Way To Learn - Financial wellness starts with knowledge. Benefi’s education offerings will help employees become more aware of their overall financial wellness and ensure they’re able to better plan for a stable and successful financial future.
A Better Way To Save - With Benefi employees will be able to automatically direct a percentage of their pay cheque to a savings or investment product specifically designed to meet their important financial goals and aspirations.
Currently very few organizations offer access to financial wellness as a benefit. This is destined to change however as expanded benefit offerings are now being viewed by many economic experts as critical for obtaining a better overall state of financial wellness for most Canadians.