Canadians are financially unwell
Often in Canada we view financial stress as a larger problem south of the border than it is up here. The reality is that Canadians are struggling. Even pre-COVID, 43% of Canadians report living cheque to cheque and we know that nearly half of Canadians are $200 away from insolvency and 54% worry they can't repay existing debts.
Current options stink
The solutions that Canadians use to help address this stress are honestly not really solutions. They're basically the financial equivalent of any port in the storm. They don't help a person out of these situations, they just end up being further leveraged. Everyone knows about payday loans, but do you know how pervasive they are? 2 MILLION Canadians use payday loans every year. 2 Million. 60% of these users don't have access to a line of credit and 86% report using a payday loan for an expected or unexpected necessary expense.
The other "solutions" that exist out there? Overdraft fees, which can actually be even worse than payday loans. Folks can also choose to defer a bill payment, or pay it late, or just pay the minimum on a credit card balance. All of these things add up and aggregate over time. Debt begets debt begets debt.
Who can help?
We've seen policies change to protect consumers from predatory products, and we are seeing some movement on overdraft and other unnecessary fees. This is a good start.
Innovators and entrepreneurs
Companies like Quber, PolicyMe, AltruWisdom and others are out there building solutions to help Canadians. Challenger-banks like Koho and Neobank are also on the rise, putting an end to some of the egregious banking fees and offering customers better budgeting tools.
Employers who care
With 43% of Canadians reporting that financial stress impacts them in the workplace, some employers are starting to recognize the strain on their employees and their productivity. Offering financial education and tools like Earned Wage Access in the workplace can not only help the employee overcome financial burdens, they also improve a businesses bottom line. In the United States, employer adopted financial wellness has been on the rise and Earned Wage Access has been widely adopted as an option to help employees manage cash flow shortcomings.
Listen, there's no magic wand we can all wave to improve the financial health of Canadians. The first step is awareness. We all need to be keenly aware that this is just not an "American" problem. Next, the employers and innovators out there trying to make a difference need our support. These solutions and alternatives being developed need to be amplified. Tell your friends, tell your colleagues, tell your peers that we are in the midst of a financial stress epidemic. There are solutions out there, and we need to make sure those solutions make it to the people who need them the most.
Check out employee wellness resources at www.zayzoon.com/covid-19-canada.
Finally, interested in having someone from the ZayZoon team speak about the financial stress epidemic in media, on a podcast or a webinar? Contact firstname.lastname@example.org.