This text is taken from Courrier de l’économie. Click here to subscribe.
Barely emerging from an extraordinary pandemic crisis, the economy has entered a period of worry and uncertainty with the soaring cost of living, the escalation of interest rates and the consequences that all this could have on economic growth and employment. It would be normal, in this context, for the level of financial anxiety of households in Quebec to rise.
At the end of the summer, 85% of the population said they felt such anxiety, with four out of ten Quebecers qualifying it as moderate (30%), severe (10%) or extreme (2%), according to a major Léger Marketing survey conducted among 2,001 respondents aged 18 and over from August 25 to September 2 on behalf of Centraide of Greater Montreal among all Quebecers. For the most anxious, this resulted in particular in sleep problems, difficulty concentrating and tension within the family.
The most anxious were in particular young people aged 18 to 34 (51% moderate to extreme), women (47%), single-parent families (63%), people who had stopped their studies after primary or secondary school (51% %) and households that spend more than 50% of their income on housing (63%).
It will come as no surprise to learn that households earning less than $40,000 a year (49%) were also more financially anxious than those earning more than $150,000 (30%).
People who do not follow financial news at all (55%) or who display a poor level of financial literacy (57%) were also part of the lot.
Express quiz
First question: Suppose you have $100 in a savings account and the interest rate is 2% per year. After 5 years, how many do you thinkyou that you will have in your account if you let the money grow there?
A- Over $102
B- Exactly $102
C- Less than $102
D – don’t know
Second question: imagine that you have money in a savings account, the interest rate in your account is 1% per year and inflation is 2% per year. After a year, with the money in this accountwould you be able to buy…?
A-… more things than today
B-… as many things as today
C-… less things than today
D – don’t know
Third question: true or false? “Buying a stock in a single company generally offers a safer return than a mutual fund. »
Actually
B – False
C – don’t know
You will find the answers to these questions at the end of this text.
Slightly less than half (49%) of respondents to the Centraide of Greater Montreal survey had all three correct answers, which led them to be considered to have “a good level of financial literacy”.
Young people (44%), women (39%), those with a lower family income (35%) or who left school earlier (36%) generally did less well. It should be noted, however, that just about everyone shows much greater confidence in their own knowledge of personal finances than the level of actual financial literacy indicates.
Main fears
The main financial fears are, in order, “never having enough money to buy a home”, “incurring a big unexpected expense” and “not having enough money saved for retirement”. “.
Most of these factors obviously depend on the socio-economic status of the respondents, the economic context and the social policies intended to cushion their effects.
However, households can also improve their lot a little not only by ensuring that they master the basics of personal finance, but by making their budget, observed, just before the COVID-19 pandemic, another survey carried out , this one, by Statistics Canada on behalf of the Financial Consumer Agency of Canada.
Indeed, writing down the money you earn, spend, and save is often associated with good personal finance behaviors, such as paying bills on time, not living beyond your means, pay off your debts more quickly, use credit cards for the right reasons and have a financial cushion in the event of a glitch.
This is also likely to have a positive effect on the level of financial anxiety. People who make their budget generally feel better equipped and more confident with regard to their financial obligations. However, just under half of Canadians (49%) make a budget, some of the others believing that it is not necessary (32%)—often because they have better incomes—but the remainder (24%) qualifying this task as too boring, saying they don’t have the time or feel they are already overwhelmed by the situation.
Answers to the quiz:
1-A
2-C
3-B