As it turns out, Canadians are really stressed about their finances. A survey conducted by Leger of over 1000 Canadians (excluding Quebec) between September 26 and October 1, 2014 revealed 42 percent of Canadians rank money as their greatest source of stress. As a result of financial stress, they are losing sleep, experiencing anxiety, lying to family and friends, re-examining past financial decisions, and even fighting with their partners about money.
Let’s look at the rest of the survey results:
Women are more stressed about finances than men.
Unsurprisingly, Canadian women are more financially stressed than men (51 percent of women surveyed reported losing sleep versus 40 percent of men surveyed). Only 23 percent of Canadians surveyed cited work as their greatest source of stress, 19 percent said personal health, and 17 percent attributed stress to their relationships.
Almost 9 out of 10 Canadians surveyed wished they had made better financial decisions.
The survey also found that while 13 percent of Canadians said they have no financial regrets, 87 percent wished they had made better financial decisions. Some of these financial regrets included saving more money, saving money earlier, investing more, investing earlier, investing smarter, and spending less. Other regrets included obtaining a better paying job, buying property, and getting a better education.
Financial stress affects relationships.
Canadian Couples that are open about personal finances argue significantly less about money than those who hide things from their partner (58 percent reported that they never or rarely argue with their partners about money). Of those that reported being less transparent about personal finances, only 30 percent said they rarely (or never) argue with their partner about money.
Financial stress can cause you to lie, which in turn is more harmful to your overall health.
The same survey exposed that Canadians are not only stressed about their finances, but they’re lying about them too! In fact, Millennials are more likely than any other generation to lie about personal finances, with 33 percent admitting they’ve been dishonest with friends, 25 percent with family, and 15 percent with coworkers. Lying requires a lot of effort (you have to make up a believable version of the story, convince others it’s the truth, and then remember it forever so you never get caught…whoa!), which can be taxing on the brain, cause anxiety, more stress, and affect your overall health.
How can we reduce financial stress?
There are a number of ways to reduce financial stress. Aside from living within your means, try the following suggestions:
Hire a professional.
Hiring a professional can be a huge challenge in itself with all the options out there today. There is one option that can help free up more time, provide more wealth, and more peace of mind for retirement – Digital Wealth Managers. With technology constantly evolving, some Digital Wealth Managers, offer the same services as traditional advisers at a fraction of the cost.
While not all Digital Wealth Managers are the same, there are some that tailor your portfolio to your personal financial goals and your life situation, which means there are no preconstructed portfolios or buckets to drop you in. They can also monitor your portfolio and rebalance it to keep it on track with your financial goals.
As well, hiring a Digital Wealth Manager means your account is a click away at all times (the internet never sleeps!), and most Digital Wealth Managers, like Nest Wealth, are available to talk over the phone or in person with their clients because we know some prefer a more personal relationship. Talk about convenience!
Digital Wealth Managers like Nest Wealth, can help you automate your finances, which can substantially improve your life and reduce stress. Instead of setting up automatic payments to a savings account (where your money would sit, and you would see minimal growth), a Digital Wealth Manager could help you prioritize your financial goals and funnel your hard earned dollars towards them (example: setting up automatic contributions to your RRSP). Less stress, more free time, and fewer emotional decisions are just a few of the benefits to automating your finances.
Learn that it pays to be passive.
When it comes to investing, Digital Wealth Managers like Nest Wealth know a passive approach to investing is the most effective way to reach your financial goals. A passive approach means your portfolio is built to “be the market”, not “beat the market”, because history has proven that passive investing is more likely to help you come out ahead financially.
Remove emotions from finances.
Money is an emotional topic, especially for investors! As the market goes up and down, our emotions often follow. In the midst of a tough market Digital Wealth Managers, like Nest Wealth, can help keep emotions out of the equation and prevent impulsive financial decisions and mistakes. Think about late 2008 and early 2009, when (according to the Investment Company Institute) more investors pulled money out of mutual funds than any other time in history. The market tanked as investors were fearful of losing even more on their investments, and we’ve been in a bull market ever since. Sometimes the best thing you can do is absolutely nothing, and a Digital Wealth Manager can help you decide when that is.
Lower fees where you can.
Did you know that next to buying a home, fees paid on investments could end up being the average Canadian’s second largest expense during their lifetime? Mutual fund fees could end up costing the average Canadian household $323,654.40 – and that’s just an average! To put that into context, that’s the same price as an average home in Ottawa, or the same price as a Ferrari.
Many Canadians don’t even know what they’re paying in fees, or that they’re paying fees at all (because they’re taken out of returns, or profits, before you get a chance to see them). The investors that know they’re paying fees probably don’t think they’re paying that much. Well, Canadians actually pay the highest fees in the developed world, with a typical equity mutual fund charging 2.35% for management each and every year! Think about it this way: if you have a $1 million dollar nest egg with a 2.35% MER (Management Expense Ratio), you’re shelling out $23,500 – from your own profits! Think of all the things you could do with $23,500, and all the compound interest you could earn if that money stayed invested. Chances are if you’re investing in mutual funds, you’re probably paying more than you need to.
Paying less in fees means you’ll have more wealth and more money to invest. Thankfully, some Digital Wealth Managers have recognized the group of individuals with investable assets who are unable to afford or just don’t want to pay 2.35% in fees. Instead of charging a percentage of assets, investors have the option to pay a flat-fee for services – similar to a subscription model, like Netflix. Find out how much you’re paying in fees here.
Hiring a professional, automating your finances, taking a passive approach to investing, removing emotions from financial decisions, and lowering fees can help ease financial stress significantly. Reducing financial stress will have a positive effect on your health, relationships, and productivity. Take the first step towards reducing financial stress – open an account today by clicking here and see for yourself the difference Nest Wealth can make.
Because when it comes to your finances, less stress and more wealth is better.