One in four Canadians is experiencing financial hardship and parents are increasingly pessimistic about the earning potential of their children.
These sobering results were highlighted in a new Angus Reid Institute study, which examined the state of poverty in Canada by looking at lived experiences rather than income.
Researchers separated the population in four groups: The Struggling (16%); those On the Edge (11%); people who were Recently Comfortable (36%); and those who are Always Comfortable (37%).
More Canadians believe their children’s generation will be worse off (43%) than they were and Rina DeGrazia, vice president, Financial Education at TD Bank, believes this is tied to the evolving nature of the work force.
She said: “We are seeing our economy evolve at a very rapid pace that has really been unprecedented. Jobs that exist today potentially won’t exist in five or 10 years from now so I think parents are struggling to understand what the career outlook looks like for their children and how they will actually earn a living wage.
“Couple that with the increase in the cost of housing and it really creates a bit of a precarious situation.”
DeGrazia said advisors have a crucial role to play by improving clients’ financial literacy and showing them how to budget effectively.
She highlighted the importance of having a good handle on what is coming in and going out, and the value of an emergency savings fund. DeGrazia also believes that working out a savings plan and making the most of automated services – she highlighted TD’s Simply Save, which saves as you spend – as good strategies.
For the younger client, a lot boils down to controlling your emotions and not comparing your life to friends’ latest Instagram post.
“Money is quite emotional,” DeGrazia said. “What can happen is now, with everything being on social media, people can get caught up in that reality. They’re looking on Facebook and seeing what their friends are doing and the lifestyles they are living. What we lose sight of is that everybody’s financial reality is different.
“So trying to keep up with friends or colleagues that are posting their lavish lifestyle on social media may not be the best approach. Really, you’ve got to anchor back on how much discretionary spending you can afford based on your situation versus trying to keep up with everyone else.”
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