Financial well-being-survey-results

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FINANCIAL WELL-BEING IN CANADA
SURVEY RESULTS

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Aussi disponibleen françaissousletitre:Le bien-être financierau Canada: Résultatsde l’enquête

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FinancialWell-Beingin Canada: Survey Results
Financial well-beingisthe extentto which you can comfortablymeet all of your current financial
commitmentsand needswhile alsohavingthe financial resilience tocontinue doingso inthe future.1
But it is not only about income.It is also about having control over your finances,beingable to absorb
a financial setback,beingon track to meetyour financial goals, and—perhapsmost of all—havingthe
financial freedomto make choicesthat allow you to enjoylife.
Generally,people whohave highlevelsof financial well-beingare not stressedabout money and are
able to cope withunexpectedexpenses.Incontrast, people withlow levelsof financial well-beinghave
difficultymeetingtheirfinancial commitmentsanddo not have much moneyin reserve for
emergencies.Betterfinancial well-beingisassociatedwithlessstress and greater mental and physical
health.2
The Financial Consumer Agencyof Canada (FCAC) participatedin a multi-countryinitiative thatsought
to measure financial well-being.FCACconductedthis surveyto understand and describe the realitiesof
Canadians across the financial well-beingspectrumandhelppolicy-makers,practitionersand
Canadians themselvesachieve betterfinancial well-being.Thisisin keepingwiththe Agency’songoing
work to monitor trends and emergingissuesthat affectCanadians and their finances.
Previousresearch3 has foundthat certain behavioursand economic factors are the key driversof
financial well-being.These,inturn,are drivenby psychological influences(suchas impulsivity,self-
control, locus of control,time orientation,actionorientation,4 and attitudestoward spending,savingand
borrowing).The analysesin thisreport are basedon the Kempson et al. model,illustratedinFigure 1.
1
Kempson,E.,Finney,A.,& Poppe,C.(2017).Financial well-being:A conceptual model andpreliminary analysis (Project
noteno. 3-2017).Retrieved fromhttps://www.researchgate.net/publication/318852257_Financial_Well-
Being_A_Conceptual_Model_and_Preliminary_Analysis.
2 Hess,D.(2016).FindingtheLinksBetween Retirement,Stress,and Health.Lockton.Retrievedfrom:
https://www.lockton.com/whitepapers/Finding_the_Links_Between_Retirement__Stress__and_Health.pdf.
3 Kempson etal.(2017).
4 In personality psychology,locusof control isthedegreeto which peoplebelievethey havecontrol overtheoutcomeof
events in their lives,asopposed to believingthatoutcomesaredrivenby external forcesbeyondtheircontrol.Time
orientation reflectsapreferencetoward past,presentor futurethinking.Action orientation isabouta person’stendency to
takeactionto addressproblemsor achievegoals.

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Figure 1 – Categories of factors relating to financial well-being
In this model,financial well-beingisdeterminedby5 categoriesof factors:
• financial behaviours(e.g.,savingand borrowing)
• social factors (e.g.,age, employmentstatus)
• psychological factors (e.g.,confidence,attitudestoward money)
• economic factors (e.g.,income)
• financial knowledge andexperience (e.g.,experience withfinancial products)1
The surveyused a numberof questionsto measure each of these categoriesof factors. The responses
were then combinedinto relatedvariables.Figure 1 liststhe variablesincludedineach category.
In November2018, FCAC releaseda Backgrounder report containingpreliminaryresultsof the survey
and a comparison of Canada’s overall resultsversus those of Australia,New Zealand and Norway. This
report expandson those resultsby:
• describingfinancial well-beinginCanada
• identifyingthe keybehaviours,attitudes,knowledge andexperiencesthatare associatedwith
financial well-being
• describingthe realitiesof Canadiansacross the financial well-beingspectrum
• making recommendationsfor Canadians,includingpolicy-makersand practitioners(such as
credit counsellors,financial advisorsand educators)

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Key messages
• Many Canadians are doing reasonablywell financially
• Income isimportant, but so are behaviours
• Financial well-beinghasa stronger relationto behavioursthan to economicfactors
• Canadians who activelysave have higherlevelsof financial well-beingthanthose withsimilar
incomeswho don’t
• Canadians who avoidborrowing to meet dailyexpenseshave higherlevelsof financial well-
beingthan those who borrow regularly,regardlessof income
• Financial confidence and attitudestoward spending,savingand borrowing are important
• For people withlessfinancial well-being, financial confidence andfeelingincontrol of the
future are stronglyrelatedto financial well-being
• Generally,olderCanadians who make positive financial choicesand have the benefitof
experience have the highestlevelsof financial well-being
Survey methodology
In February 2018, FCACconducted an online surveywitha sample of Canadians aged 18 years and
older.A very similarsurveyhad previouslybeencompletedinNorway,Ireland,Australiaand New
Zealand.Slightchanges were made to some of the questionsto adapt themto each country’s context,
but the resultsare largelycomparable.
We selectedrespondentsrandomlyfrom a broad pool of Canadianswho volunteerto participate in
online surveys.Online surveyshave become commonplace in Canada, and findingshave beenshown
to generalize well.5 The surveywas completedby a sample of 1,9356 Canadian residentsrepresentative
of the distributionof gender,regionand age inCanada.7 The surveytook approximately15 minutesto
complete.Further detailsabout the methodologycan be obtainedfrom Library and ArchivesCanada.8
Results
This sectiondescribesthe surveyresults.Specifically, itdescribesCanadians’overall levelsof financial
well-beingaswell as components of the financial well-beingmodel thatare most stronglyrelated to
financial well-being.
5
See Braunsberger,K.,Wybenga,H.,& Gates,R.(2007).“Acomparisonof reliabilitybetween telephoneand web-based
surveys.”Journal of BusinessResearch,60(7),758–764.
6
An additional 99surveyswererejectedduean insufficientnumberof validresponses.Valid responsesincluded all answers
except“don’tknow”or “prefer notto answer”.
7 As an incentivefor theirparticipation,Ipsos(theresearchfirmthatcontacted participants) offered respondentspoints
they could redeemfor productsfromonlineretailers,suchasgiftcardsandprizes.Theseniors(65yearsandover) in our
samplehadhigher incomesthantheCanadian averagefor thesameagerangereported by StatisticsCanada,butwere
similar interms of education,marital statusandemploymentstatus,andhadslightly lower levelsof homeownership
withouta mortgage.
8
http://epe.lac-bac.gc.ca/100/200/301/pwgsc-tpsgc/por-ef/financial_consumer_agency/2018/086-17-
e/summary/Exec_Summary_Appendices_excluding_tabs_HTML5_Eng.html.

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Most Canadiansare doing reasonably well financially.
To assessCanadians’ overall financial well-being, we calculateda Financial Well-BeingScore out of 100
for each survey respondent.The average score was 66.
Looking at the distributionof scores (Figure 2), we can see that three quarters (74%) of Canadians had
a score of greater than 50. As we explainbelow,Canadianswho scored above 50 are consideredeither
FinanciallySecure (if theyscored over80) or Somewhatfinanciallysecure (if they scored 51 to 80).
We can also see that about one quarter of Canadians(26%) had Financial Well-BeingScoresof less
than 50. These Canadians are consideredto be Strugglingsomewhat (if theyscored 31 to 50) or
Strugglinga lot (if theyscored 30 or less) withtheir finances.
Figure 2 – Overall financial well-being
The overall Financial Well-BeingScore can be dividedinto3 components:
• meetingcommitments(for example,beingable to pay billsontime)
• feelingfinanciallycomfortable (forexample,the extenttowhichfinancesallow someone to do
the thingsthey want and enjoylife)
• resilience forthe future (forexample,the abilityto deal with unforeseenexpenses)

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We calculated mean scores for these 3 components.Canadians obtainedmean scores of:
• 81 for meetingcommitments
• 61 for feelingfinanciallycomfortable
• 60 for resilience forthe future
Figure 3 shows the distributionof scores for Canadians for each component.
While most Canadians were very strong at meetingall of theircommitments (Figure 3a), the extentto
which theyfeltcomfortable financiallyranged greatly(Figure 3b). Clearly,many Canadians are meeting
theircommitments,but do not feel theirfinancial situationallowsthemto do the thingsthey want.
Some Canadians are in a good positionto be resilientforthe future—forexample,approximately30%
had a score of 80 or greater for this component—butmany others have lowerlevelsof resilience
(Figure 3c).
These results tell usthat Canadians stand to benefitfrom strategiesthat wouldallow them to build
more buffersintotheir spendingplansand be better preparedfor financial setbacks, such as
unexpectedexpendituresora drop in income.
Figure 3 (a, b, c) – Canadians’ scores on 3 key components of financial well-being
We considered5 categoriesof factors—financial,economic,psychological,social,and knowledge and
experience factors—andconducted analysesto determine whichof them9 were most stronglyrelated
to Canadians’ financial well-being.Eachset of factors containeda numberof relatedvariables.For
example,variablesinthe economic factors category includedincome,work status and home
ownership.Knowinghow these factors and their underlyingvariablesrelate to Canadians’financial
well-beingisimportantfor policy-makersandpractitioners—suchas creditcounsellors,financial
advisors and educators—whoare lookingfor advice on which behaviours,experiences,attitudes,types
of knowledge, andsocial or economic differencesare most closelyrelatedto financial well-being.
9
Previouswork on thefinancial well-beingmodel (e.g.,Kempsonetal.,2017),foundthatthesefactorswererelated to
financial well-being.

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The cross-sectional data yieldedbythe surveydon’t tell us definitivelythatimprovinga person’sscore
in 1 area will improve theiroverall financial well-being.However,knowinghow each of these factors
relatesto financial well-being—andunderstandingthe relative strengthof the relationshipsbetween
them—isthe first step toward targeting areas for improvement.
Income is important,but so are behaviours.
As shown inFigure 4, financial well-beingincreasessignificantlyashouseholdincome risesabove
$50,000. However,the average Financial Well-BeingScore does not differbetweenhouseholdswith
income between$50,000 and $150,000 (dark blue bars). Financial well-beingonlyrisesagainfor the
highestincome group (more than $150,000).
In other words, the relationshipbetweenincome and financial well-beingisstrongestfor Canadian
householdswithverylow or very high incomes.The fact that there is little change infinancial well-
beingacross most income groups isconsistent withthe findingthat other factors, such as behaviour,
have a greater impact on financial well-being.Thisfindingisstrikingbecause it iscounter-intuitive and
contrary to many people’sbeliefsthathigherincome alone alwaysleadsto greater financial well-
being.10
Figure 4 – Financial Well-BeingScores by household income
10 In the Canadian Payroll Association’s2018 survey,when asked “Whatwouldbethesinglemosteffectivestep you could
taketo improveyour financialsituation?”themostpopular responsewas“earn more”.Thisresultwasconsistentwith
resultsof theassociation’s2015–17 surveys.

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Financial Well-BeingScoresvary greatly withineach income bracket (Figure 5). Notably,there are some
Canadians in highincome brackets (that is, with annual householdincomesover$100,000) who report
relativelylow financial well-being(Financial Well-BeingScore below 50: orange and red bars), while
some inthe lowestincome brackets (householdincome under$25,000) report relativelyhighfinancial
well-being(Financial Well-BeingScore 50 to 100: dark blue and teal bars).
Figure 5 – Level of financial well-beingby household income bracket
Financial well-being is more strongly related to behavioursthan to economic factors.
While economic factors (includinghouseholdincome) clearlyplayan important role ina person’s
financial well-being,11 ourmodel showsthey are not the factors with the strongestrelationshipto
financial well-being.We foundthat for Canadians’Financial Well-BeingScores:
• 23% of their score was relatedto financial behaviours
• 19% was related to economic factors
• 12% was related to psychological factors
• 12% was related to social factors
• 4% was relatedto knowledge and experience
This tellsus that how a personmanages their money(for example, how oftenthey save and how often
they borrow) has the strongest relationshipto theirFinancial Well-BeingScore,followedbyeconomic
11
Vlaev,I.,& Elliot,A.(2013).Financialwell-beingcomponents.Social IndicesResearch,118,1103–1123.

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factors, such as income,owning versusrentinga home,and employment(workingfull-time versus
workingpart-time or beingunemployed).These resultsimplythat to improve theirfinancial well-being,
Canadians have optionsother than changing their income or work status. They may be able to get
good resultssimplyby alteringcertain financial behaviours.
Canadianswho actively save have higher levels of financial well-being than those with the same income
who don’t.
Next,we examinedhow each individual variable (consideringall 5 categories of factors) related to
financial well-being.The variable withthe strongestrelationshipwas active saving,which relatedto
10% of the variabilityinFinancial Well-BeingScores.
We assessedactive savingthrough questionsabouthow often someone:
• saved moneyfor unexpected,majorexpensesor a drop in income
• triedto save funds to fall back on during hard times
• triedto save regularly,evenif onlya small amount
On the surface, it may seemobviousthat people whoearn enough moneyto be able to save would
have higherfinancial well-being.However,thatis not the whole story.The analysis controlledfor
economic and demographic differencesbetweenindividuals,suchas income,age, numberof
dependentchildren,workstatus and more.This findingdemonstratesthat intentionallysettingmoney
aside is the variable most stronglyrelated to financial well-being,regardlessof income level orother
demographic influences.
Because active saving accounted for such a large portion of the Financial Well-BeingScore,we wanted
to better understandthis behaviourso we could guide Canadians and helppractitionersencourage it.12
Broadly, we found that psychological factors are the onesthat have the greatest relationshipto
whetheror not a Canadian regularly savesmoney.13 More specifically,the wayCanadians thinkand
feel about moneyaffectswhether or not they save. 14 Perhaps not surprisingly, those who have
positive attitudestoward savingand negative attitudestoward borrowing are more likelytosave.As
well,those who take a long-termview are more likelytosave compared with those more inclinedto
live for the moment.
The same principle appliestoCanadians who feel confidentaboutmanaging their moneyday to day,
planningfor their financial futures,and making decisionsaboutfinancial products and services:they
are more likelytosave and have higherlevelsof financial well-beingthanthose who feel lessconfident
about money management.
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Weconducted a regressionanalysisusingactivesavingasthedependentvariableandvariablesfromthepsychological,
economic,social,and knowledgeandexperiencecategoriesastheindependentvariables.Wedidnotincludethe7
remainingvariables fromthefinancial behaviourscategory becausethey areinter-related.
13 Psychological factorsaccounted forthehighestpercentageof variability in activesavingscores(21%),followed by
economicfactors(17%).Social aswell asknowledgeandexperiencefactorsaccounted forsmallerportionsof thevariability
(5%and 4%,respectively).
14
The attitudestoward spending,savingandborrowingvariableaccounted for 6%of thevariability in activesavingscores,
followedby timeorientation(4%) and financial confidence(4%).

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Helpingsomeone to developa new mindsettoward spending,savingand borrowing or changing their
perspective onhow much control theyhave over theirlife may be challenging.However,unlike
social/demographicfactors (such as age,gender or number of dependents),psychological factorslike
these can potentiallybe modified.15 Giventhe findingthatpsychological factors are stronglyassociated
withfinancial well-being, thispotential malleabilityisencouragingbecause it may lead to innovative
interventionstohelpCanadians improve theirfinancial well-being.
Canadianswho avoid borrowing to meet daily expenses have higher levels of financial well-being than
those who borrow regularly, regardless of income.
The variable with the next strongestrelationshipto financial well-beingwasa financial behaviour:not
borrowing for dailyexpenses.Itrelatedto 5% of the variabilityinFinancial Well-BeingScores.We
assessedthisvariable through questionsabout how often a person borrowed moneyto pay off debts,
was overdrawn on theirbank account, or usedcredit for food and dailyexpensesbecause theyhad run
short of money.As describedabove, thisresulttakes into account elementssuchas income and
demographics.It indicatesthat whenall other elementsare constant, not borrowing for dailyexpenses
is the variable most stronglyrelatedto financial well-being.Itappearsthat individualswhofindwaysto
avoid borrowingfor dailyexpenses—forexample,byreducingtheir spending—have higherfinancial
well-beingregardlessof income level, savingsbehaviours,familystatus,home ownership, educationor
work status.
Generally,we found that whethera Canadian borrowedfor daily expenseswasmost stronglyrelated
to both psychological and economicfactors.16 Similarto what we learnedabout active saving, those
who had positive attitudestoward saving and negative attitudestoward borrowing were lesslikelyto
borrow (as were those with higherfinancial confidence).We also foundthat those who were good at
resistingtemptationand breaking bad habits,and who feltincontrol of themselves,were lesslikelyto
borrow for daily expenses.17
These insightsinto the variablesrelatedto not borrowing for dailyexpensesmayhelppractitioners
pinpointareas to focus on withCanadians who want to improve their financial well-being.For
example,withCanadianswho tend to borrow moneyfor dailyexpenses,practitionersmightlookfor
ways to helpthem buildtheirfinancial confidence,increase theirself-control,andchange their
attitudestoward spending,savingand borrowing.
Overall, financial well-beingwasmoststrongly relatedto 2 financial behaviourvariables:active saving
and not borrowingfor dailyexpenses.Differencesinthese behaviourswere,inturn, most strongly
associated withpsychological and economic factors. For both of these financial behaviours, financial
15
For example,Magidson,J.F.,Roberts,B.W.,Collado-Rodriguez,A.,& Lejuez,C. W.(2014).Theory-driven interventionfor
changingpersonality:Expectancy valuetheory,behavioral activation,and conscientiousness.Developmental Psychology,
50(5),1442–1450.
16 Psychological and economicfactorseach accounted forapproximately13%of thevariability in the“notborrowingfor
daily expenses”scores.Socialfactorsaswell asknowledgeand experiencefactorsaccounted forsmallerportions(5%and
3%,respectively).
17
Attitudetoward spending,savingand borrowingaccounted for6%of thevariability inthe“notborrowingfor daily
expenses”scores,followed by financialconfidence(3%) and self-control (2%).

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confidence and attitudestoward spending,saving and borrowing were behindmost of the variabilityin
Financial Well-BeingScores.
Financial well-being groups
To gain insightintothe proportion of Canadiansexperiencingdifferentlevelsof financial well-being
and understand more about what the levelsmeanin practical terms, the studyplaced Canadian
respondentsinto1 of 4 groups based on their Financial Well-BeingScores.These groups representhow
well theirmembersare doing financially.The 4 groups are:
• FinanciallySecure
• SomewhatSecure
• StrugglingSomewhat
• Strugglinga Lot18
In this section,we presentthe proportion of Canadians ineach group and discuss:
• how each group tendsto describe its financial situation
• demographic informationabout the group
• the variablesrelatedto financial well-beingwithinthe group
• how the groups differfrom each other
Figure 6 shows the range of Financial Well-BeingScoresthat were used to create the groups and the
percentagesof Canadians in each. As mentionedearlier,Canadianson the whole seemto be doing
reasonablywell:more than 74% fell intothe top 2 groups, FinanciallySecure and SomewhatSecure.
18 The groupswereconstructedaccordingto guidelinessetby D.Hayes,J.Evansand A.Finney.Formoreinformation,see:
http://www.bristol.ac.uk/media-
library/sites/geography/pfrc/Momentum%20Index%20PFRC%20March%202016%20FINAL%20Report%20-
%20after%20minor%20revisions%20(15_08_2016)%20%20.pdf.

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Figure 6 – Percentage of Canadian respondents in each financial well-beingcategory
To offera better understandingof what the financial situationislike for Canadians inthese groups,
includingtheirdemographic compositions,we describe the groups in the next section.
Note that the main elementsthatare relatedto a person’s financial well-beingwouldlikelybe
differentforeach group. For example,Canadiansin the Struggling a Lot group might findthat their
financial well-beingisrelatedto differentinfluencesthanthose in the FinanciallySecure group. To
explore thispossibility,we alsolookedat each group individuallyandexaminedwhichvariableswere
relatedto financial well-beingwithinthe group. 19
19
Weconducted regression analyseswithineachgroup to determinethefactorsmoststrongly related to financial well-
beingwithin thatgroup.

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Among membersof the FinanciallySecure group, income was the variable most strongly relatedto
financial well-being.Thisisconsistentwiththe finding(describedearlier) thatincome doesmake a
difference atthe high endof the income spectrum: all membersof the FinanciallySecure group have a
fairlyhigh level of financial well-being,butwithinthisgroup, those with the highestincomes tendedto
have the highestFinancial Well-BeingScores.
At very highlevelsof income,people can enjoya very highlevel of financial well-beingwithoutbeing
cautious about how each dollar is spent. They can make small mistakesand recover from them without
long-termimpacts. They can easilycovertheir necessaryexpenses,affordsome “wants” or luxuries,
and still put some moneyaside for the future. This is not to say it isimpossible forsomeone withvery
high income to have difficultycoveringtheirexpenses,butclearlythe challengesandopportunitiesare
differentthanat lowerlevels.Individualswithhigherincome also tendto have more disposable
income and opportunitiestogain experience witha range of financial products and services.For
example,topurchase investmentproducts and access professional financial advice,youneedmoney,
both to investand to pay for the advice.
Knowledge of moneymanagement (i.e.,knowinghow to plan spendingagainst income,choose the
right savingsproducts, and choose the right consumerloans and creditcards) was also stronglyrelated
to Financial Well-BeingScoresin this group. This findingdemonstratesthat financial well-beingisnot
just about how much money someone has; everyone inthe FinanciallySecure group has a high level of
financial well-being.Whatdistinguishesthose whoare doing well fromthose who are doing very well
are skillsrelatedto how theymanage the money theyhave. This isan important considerationfor
Canadians and practitioners,since these knowledge areasand skillscan be learnedand developedover
time.

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Among the SomewhatSecure group, the numberof dependentchildrenlivingathome was strongly
relatedto financial well-being.Those whohad fewer(or no) dependentchildrenat home tendedto
have higherfinancial well-beingthanthose with more. This likelyhasto do with the number of people
beingsupported by the household’sincome today and into the future.The anticipationof future costs
to support dependents(suchas the needto pay for their education) may add considerable stressto
these Canadians. The number of childrenlivingat home is oftenhighlycorrelatedwith an individual’s
age, peakingin the mid-adultyears. As people getolderand approach retirement,theirchildrenoften
become independentandleave home.
Those who ownedtheirhome (as opposedto renting) tendedto have higher financial well-being,
especiallythose whowere mortgage-free.This islikelybecause of the effectthat housingcosts have on
disposable income.Beingmortgage-free isfrequentlyassociatedwithlife stage: youngadults oftendo
not own a home,but as theybecome establishedina career and perhaps start a family,they purchase
one witha mortgage, and pay the mortgage off over time.

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It is important to note that paying a mortgage off over time (as opposed to continuingto carry it) is
advantageous.Historically,this was the onlyoptionfor most people,butin recent years, home-equity
linesof credit (HELOCs) have beengaining inpopularityin Canada. The problemisthat witha HELOC,
27% of Canadians make interest-onlypaymentsmostmonths or every month,20 resultingindebt
persistence. For people whoare SomewhatSecure,a HELOC can provide useful flexibilitywhenit
comes to fundingrenovationsor other major home expenses.Butfor home owners who will struggle
to pay themoff reasonablyquickly,HELOCs can leadto unintendedconsequencesandwealth erosion.
Practitionersshouldkeepthis in mindwhen advisinghome buyers on theiroptions for fundinghome
purchases and ongoing home expenses.Theyshouldhighlightthe importance of paying down
mortgages and avoidingconsumerdebt to reach long-termfinancial goals.
20
Financial ConsumerAgency of Canada,Homeequity linesof credit:Consumer knowledgeandbehaviour(Ottawa,ON:
Financial ConsumerAgency of Canada,2019).

19
Our analyses of the Struggling Somewhatgroup revealedthat not borrowing for dailyexpenseswasthe
variable most strongly associatedwith higherfinancial well-being.Aswithall Canadians surveyed,
Canadians in thisgroup whodid not borrow to cover theirdaily expensestendedtohave higher levels
of financial well-being.Thisresulttakesinto account elementssuchas income and number of children
at home,and indicatesthat whenall otherelementsare constant, not borrowing for dailyexpensesis
the variable most strongly relatedto financial well-beinginthisgroup.
This indicatesthat having low income, or low amounts of disposable income,isnot the onlyreason for
borrowing for dailyexpenses;withinthisgroup, individualsare making differentchoicesabout how to
manage their cash flow,withsome borrowing to cover dailyexpensesandothers not. Those who are
findingways to avoidborrowing for dailyexpenses—perhapsbycuttingback or putting off regular
expenseswhenan unexpectedexpense comesup—have higherlevelsof financial well-being.

20
Our analyses showedthat having post-secondaryeducationwas stronglyrelatedto financial well-being
for Canadians in thisgroup. In general, post-secondaryeducationwas associated withhigher earning
potential21 and higherfinancial literacy.22 Thisindicatesthat lower-income Canadianshave the
potential to benefitfromincreasedearnings through educationevenmore than do Canadians in
higher-income groups.Canadians in the Struggling Somewhatgroup may wishto consider whether
additional trainingcould improve the opportunitiesavailable tothem and, inturn, theirfinancial well-
being.
21 StatisticsCanada.Doeseducation pay?Acomparison of earningsby level of education inCanadaand its provincesand
territories.Retrieved from:https://www12.statcan.gc.ca/census-recensement/2016/as-sa/98-200-x/2016024/98-200-
x2016024-eng.cfm.
22
Financial ConsumerAgency of Canada.(2015).Managingmoney and planningforthefuture:Key findingsfromthe2014
CanadianFinancial Capability Survey [PDF].

22
Withinthe Struggling a Lot group, Canadians who had a higherscore for locus of control tendedto
have higherfinancial well-being.Locusof control refersto the extentto which people believe they
have control over the outcomes of eventsin theirlives,as opposedto external forcesbeyond their
control having more influence.A respondent’sscore in thisarea was based on theirlevel of agreement
withthe 3 followingstatements:
• “I can pretty much determine whathappensin my life”
• “My financial situationis largelyout of my control” (reverse coded)
• “When I make financial plans,I do everythingIcan to succeed”

23
Sometimeswhena person feelseverythingisoutof control, an advisable approach is to findone
achievable goal and focus on that.23 Practitionerscan support people inthis situationby helpingthem
identifyanappropriate goal and relatedresources. For example, those who struggle with filingtheir
taxesmight benefitfromvisitinga Community VolunteerIncome Tax Program, where a volunteer
could helpthem.This act alone couldbe extremelybeneficial bymakingsome individualsaware of
benefitstheymay qualifyfor and are not currently receiving.OtherCanadians might have information
or otherresources available to them at work, such as through theirhuman resourcesdepartment or an
employee assistance program. The Governmentof Canada has a wealthof resources available at
www.Canada.ca/moneyto helpCanadians manage their money.
23
Robitaille,N.(2018).Managingyourdebtrepaymentgoals.Retrieved fromhttp://www.rotman.utoronto.ca/-
/media/Files/Programs-and-Areas/BEAR/FINLIT2018/19-Day-1-1615-
Robitaille.pdf?la=en&hash=715D82E7A22030D69C75ECFAF41DBE4C68BFB608

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Howdo these groups differfrom eachother?
Next,we exploredhow the 4 groups differed24 intheirfinancial behaviours, psychological
characteristics, knowledge andexperience,anddemographics.25
At the lower end of financial well-being, locus of control and financial confidence played larger roles.
The StrugglingSomewhat and Struggling a Lot groups shared similardemographics,includingannual
householdincome,education, home ownershipand number of childrenunder 18 at home.Where the
2 groups differedwasin keyfinancial behaviourvariables(active saving, not borrowing for daily
expenses,26 andspendingrestraint) and 2 psychological variables(locusof control and financial
confidence).
These key behavioural and psychological differencesmaybe contributing to the differencesinfinancial
well-beingbetweenthese groups. Therefore,whenpractitionerswork withclientswho have relatively
low financial well-being, theymayfindsuccess in helpingthemidentifywaysto save actively,limit
borrowing for dailyexpenses,andrestraintheir spending.Practitionerscouldalso helpclientsgain
financial confidence bysuggestingsteps theycould take to experience successinmoneymanagement
and ways to helpthemfeel more incontrol of their future. Where tight financial restraintslimita
person’sfinancial well-being,changesto these behavioursand psychological factors have the potential
to increase theirfinancial well-beingsuchthat they may be able to transitionfrom Strugglinga Lot to
StrugglingSomewhat.
At the upper end of financial well-being, life stageplayed a larger role.
Members of the FinanciallySecure group appeared to be ina league of theirown, scoring significantly
higherthan membersin all other groups on the financial behaviour, psychological,and knowledge and
experience measures.Thisgroup also stood out in terms of several demographic factors: on average,
they were significantlyolder;the percentage holdingat leasta bachelor’sdegree was significantly
higherthan inall the other groups; theyhad significantlyfewerchildrenunderthe age of 18 at home;
and they were more likelytoown their homes.
The SomewhatSecure group layin the middle.Itsmembersreported more financiallybeneficial
behaviours, psychological attributes,and knowledge andexperience thanthose in the Struggling
Somewhatand Strugglinga Lot groups, but still significantlyfewerthanthose inthe FinanciallySecure
group. Demographically,the Somewhat Secure group had higher householdincomesand a higher
percentage of members witha bachelor’sdegree compared with the Struggling Somewhatand
Strugglinga Lot groups, but lowerhouseholdincome and lesseducation on average than those in the
FinanciallySecure group. Those in the Somewhat Secure group were more likelytohave a mortgage
and more childrenunder age 18 at home than those in the FinanciallySecure group.
24 Based on Bonferroni multiplecomparisonsof themean scoresfor each group forthevariablebeingdiscussed.
25
Recall thatthebehaviour,psychological,and knowledgeand experiencescales werecoded suchthathigherscoreswere
associated with better financial well-being.
26
Recall thatthisvariablespecifiedthatborrowingwasbecausetheindividual ran shortof money.

26
Based on these patterns, we exploredwhetherit ispossible that life stage is a key difference between
the SomewhatSecure and FinanciallySecure groups. Specifically,we wonderedif many Canadians in
the SomewhatSecure group are simplyyounger versionsof those in the FinanciallySecure group who
may well move into that group over time if they practise good financial habits,such as payingoff their
mortgages, avoidingdebt and savingregularly.
As the previousdescriptionsshowed,Canadiansin the Somewhat Secure group are generallydoing
well,butface financial demands (such as raisingchildrenand payingoff mortgages) that are lesslikely
to be an issue for olderCanadians, like those inthe FinanciallySecure group. For example,Canadiansin
the FinanciallySecure group are more likelytobe 60 years of age or older compared withrespondents
in the Somewhat Secure group.27 They are also more likelytobe retired 28 and to have paidoff their
mortgages.29 Canadiansin the SomewhatSecure group are almost twice as likelytohave children
under the age of 18 livingat home versusthose inthe FinanciallySecure group.30
Giventhat as a person ages,they are lesslikelytohave childrenat home—and that if theyhave been
diligentlypayingoff a mortgage, they are more likelytoown theirhome outright eventually—these 2
keydemographic differencesbetweenthe SomewhatSecure and FinanciallySecure groups appear to
be mainlyrelatedto age and life stage.Knowledge andexperience of financial products could also
increase with age as a person’scircumstances change and theybecome more aware of products that
suit a varietyof needs.If theyhave adequate resources and have maintainedgood financial habits
throughout adulthood, they are more likelytohave other assets,such as savingsand investments.
The FinanciallySecure group also had higherscores on all of the variablesin the psychological factors
category exceptfor social status.31 While it ispossible that the higherscores in the psychological
factors category are also age-related,32 anotherpossibilityisthatmembers of this group have always
had relativelyhighcapabilitiesinthese areas. It ispossible that the current group of seniorshas a
higherproportion of people withpsychological perspectivesthatbenefittheirfinancial well-being.
There isno guarantee that youngerCanadians will move into the FinanciallySecure group through
aging alone.
27
The proportion of respondentsaged 60or older in theStrugglinga Lot,StrugglingSomewhatand SomewhatSecure
groups ranged from18%to 24%.However,theproportion was50%intheFinanciallySecuregroup,andstatisticalanalyses
revealed thatthisgroup wasdifferentfromtheothers.
28
The proportion of retireesintheStrugglinga Lot,StrugglingSomewhatandSomewhatSecuregroupsranged from19%to
23%.However,theproportionwas47%in theFinancially Securegroup,and statistical analyses revealedthatthisgroupwas
differentfromtheothers.
29 The proportion of homeownerswithoutmortgagesranged from9%to 23%in theStrugglinga Lot,StrugglingSomewhat
and SomewhatSecuregroups.However,theproportion was52%intheFinancially Securegroup,andstatistical analyses
revealed thatthisgroup wasdifferentfromtheothers.
30
The proportion of respondentswith children under18 yearsof agelivingathomewas22%in theSomewhatSecure
group and 12%in theFinancially Securegroup.Statistical analysesrevealedthattheseproportionsweredifferent.
31
The social statusvariablemeasured theextentto which apersoncared abouthowother peoplesawthemor theirstatus,
includingtheirdesirefor peopleto respectthem.
32 Thereis evidencethatpeoplebecomemoreconscientiousasthey growolder (Allemand,Zimprich& Hendriks,2008;
Donnellan & Lucas,2008;Lucas& Donnellan,2011;McCraeetal.,1999)andthatconscientiousnessisrelated to all of the
variablesin thepsychological factorscategory (deBruijn,deGroot,van den Putte& Rhodes,2009;Donnelly,Iyer & Howell,
2012;Dunkel & Weber,2010;Jensen-Campbell,Knack,Waldrip& Campbell,2007;Judge,Erez,Bono & Thoresen,2002;
Jostmann & Koole,2010;Kuhl & Fuhrmann;1998;Olson,2005;Penley & Tomaka,2002;Verplanken & Herabadi,2001;
Whiteside& Lynam;2001;Zimbardo & Boyd,2015).

27
Giventhe demographic differencesbetweenthe SomewhatSecure and FinanciallySecure groups, and
the plausible explanationsforthe FinanciallySecure group having higherscores on variableswithinthe
psychological and knowledge and experience categories,we suggestthat life stage plays a large role at
the upperend of the financial well-beingscale.
This doesnot mean that no younger people are inthe FinanciallySecure group or that aging alone is
enoughto bump someone intothe FinanciallySecure group. But it doesappear that some younger and
middle-agedadultswhohave higherlevelsof financial well-beingandhave developedhealthyfinancial
habits will likelymove intothe FinanciallySecure group at a later life stage.These habitsinclude
making an effortto activelysave money,carefullyconsideringhow moneyis spent, managing debt
appropriately, and making informedfinancial decisionsandproduct choices.

28
Conclusion
Overall,three quarters of Canadians have a Financial Well-BeingScore of 50 or more, which places
them ineitherthe Somewhat Secure group or the FinanciallySecure group. This means that about a
quarter of Canadians are struggling withtheir financesto some extent.
An area of strength for Canadians is payingbillson time.However,unfortunately, many Canadians do
not have a lot of bufferin theirbudgets. Thisis a concern giventhat Canadians currentlyhave record-
high debtlevels,accumulatedduring the recent periodof historicallylow interestrates.33 Whenrates
rise, or if other macro- or micro-economicfactors change, some Canadians—particularlythose in the
bottom 3 financial well-beinggroups—will finditmore challengingtomake all of theirbill paymentson
time.Therefore,it iscriticallyimportant that we continue to take stepsto helpCanadians improve
theirfinancial planning,saving,attitudes toward money, and knowledge of money management.This
will helpthemprepare to face rising interestrates,economic downturns and other financial challenges
that may lie ahead.
Economic elements,suchas employmentstatus and income,will alwaysbe important componentsin
financial well-being.Ouranalysisshowedthat Canadians livinginhouseholdswithincomes below
$50,000 had significantlylowerlevelsof financial well-beingthanthose in higher-income households.
But the resultspresentedin thisreport show that income is not the onlyelementthat determines
financial well-being,andisnot eventhe elementwiththe strongestconnection to financial well-being,
for Canadians as a whole.Financial behaviours,such as saving and borrowing,were more strongly
relatedto financial well-beingthanelementssuchas income,employmentstatus and home
ownership.The resultsof our analysesshow that these behaviourshave positive effectsevenwhen
demographic elements(suchas number of dependentchildren) andeconomicelements(suchas
income) are taken into account. This is encouraging newsfor Canadians who wishto improve their
financial well-being,because forsome,it may be more possible to change these behavioursthan to
increase their income significantlyorchange theiremploymentstatus.
The surveyresults indicate that psychological factors are also stronglyrelatedto financial well-being.In
particular, Canadians who were financiallyconfidentandpreferredsaving to spendingand borrowing
tendedto have higherfinancial well-being.A numberof researchers have alsofound a linkbetween
financial confidence and financial outcomes.34 Understandingmore about how to helpsomeone
improve their confidence—aswell astheirknowledge of day-to-daymoney managementand their
abilityto plan for theirfinancial future and make decisionsaboutfinancial products and services—will
be an important research questiongoing forward.
33
Poloz,Stephen S.Bank of Canada.Canada’sEconomy and HouseholdDebt:HowBigIs theproblem? May1,2018.
https://www.bankofcanada.ca/2018/05/canada-economy-household-debt-how-big-the-
problem/#targetText=At%20the%20end%20of%20last,three%2Dquarters%20of%20this%20debt(May 2018).
34 Palmeta,Nguyen,Shek-wai Hui,& Gyarmati,2016.Thelinkbetween financial confidenceand financial outcomesamong
working-agedCanadians.https://www.canada.ca/content/dam/canada/financial-consumer-
agency/migration/eng/resources/researchsurveys/documents/link-confidence-outcomes.pdf.
Scerbina,etal.(2017).Measuringup:Canadian Resultsof theOECD PISA2015Study.
https://www.cmec.ca/Publications/Lists/Publications/Attachments/371/PISA2015_FL_EN.pdf.

29
Despite the fact that many Canadians had reasonablyhigh levelsof financial well-being—74% of
Canadian respondentshad a score of 50 or more—there was a great deal of variability.The trends we
observedprovide some insightsinto how bestto helpCanadians at differentlevelsof financial well-
being.Canadians in the Struggling a Lot and Struggling Somewhatgroups differedincertain key
behaviours, includingmakingregular effortsto activelysave and findingways to avoid borrowingfor
dailyexpenses.Althoughithas yet to be tested,thisfindingsuggeststhat helpingCanadiansin the
Strugglinga Lot group findways to avoid borrowing for dailyexpenses(whichmayinclude bolstering
spendingrestraint) and increase theireffortsto save could helpimprove their level of financial well-
being.
These 2 groups alsodifferedin2 psychological variables:locus of control and financial confidence.
HelpingCanadians withvery low financial well-beingfeel more control over their financial futuresand
more confidentabout theirmoney managementand financial decision-makingskillsmayalso
significantlyimprove theirfinancial well-being.
In contrast, knowledge of financial managementwas a strong predictor of the financial well-beingof
Canadians in the FinanciallySecure group. This suggests that effortsto improve the financial well-being
of individualswhoare alreadydoing quite well mightbe bestfocused on increasingtheirknowledge of
how to plan spendingagainst income as well as theirknowledge of savingsproducts, consumerloans
and credit cards.
In this report, we have identifiedstrengthsand weaknessesinCanadians’financial well-beingaswell as
how specificbehaviours,knowledge,experience andpsychological factors relate to financial well-being
for differentgroups.This is an important step toward identifyingwaysto improve Canadians’ financial
well-being.
Next steps
These findingsprovide valuable insightsthat may benefitpractitionersand other financial literacy
stakeholderswhenit comes to designingand deliveringfinancial literacyinterventionsgoingforward.
Our findingsleadto two general recommendationsfor practitioners.
• In general, encourage active saving. Practitioners can do thisby focusing on interventionsthat
seekto alter psychological factors, such as encouraging a long-termview, developingpositive
attitudestoward savingand negative attitudestoward borrowing,and helpingindividualsfeel
confidentin theirfinancial situations.Thisincludesconfidence inmanaging their moneyfrom
day to day, planningfor theirfinancial futures,and making financial decisionsabout financial
products and services.Settingup automatic savings mechanisms(such as an automatic transfer
to a savingsaccount everymonth) and setting financial goalswouldalso be useful.
• In general, discourage borrowing for daily expenses.Practitioners can do thisby focusing on
interventionsthataim to increase financial confidence anddeveloppositive attitudestoward
saving and negative attitudestoward borrowing. Other practical tips include askingan
employerfor a salary advance, or askingcreditors for more time to pay bills.

30
Our findingsalso leadto specificrecommendationsthat practitioners might want to considerfor
Canadians in the identifiedgroups.
• To help Canadians in the Struggling Somewhat and Struggling a Lot groups: Practitionerscan
considerhow to helpindividualsidentifywaystoincrease savingsand avoid borrowing for daily
expenses.Itwouldbe useful to helppeople inthisgroup feel more control over theirfinancial
situations.One strategy could be to helpidentifyan appropriate goal and relatedresources.
Practitionersmay alsoconsider findingwaysto helpindividualsgainexperiencesthatcan
increase financial confidence through moneymanagement, planningfor the financial future
and making decisionsabout financial products and services. Canadians in the Struggling a Lot
group would alsobenefitfrom accessingfinancial education on these topics,for example
through work or communityorganizations.
• To help Canadians in the Struggling Somewhat group: Focus on not borrowing for daily
expenses(see general recommendationsabove).
• To help Canadians in the Somewhat Secure and Financially Secure groups: Ensure these
Canadians know enoughabout savings products, consumer loans and credit cards to choose the
right ones for theircircumstances. It is also advisable to ensure that Canadians are paying off
theirmortgages and avoidingother forms of consumer debtthrough products such as credit
cards and HELOCs. In general,Canadians in these groups shouldfocus on buildingassets
through vehiclessuch as TFSAs and registeredretirementsavingsplans(RRSPs), and investingin
registerededucationsavingsplans (RESPs) if theyhave childrenwho will likelybe interestedin
post-secondaryeducation.
We encourage practitionersand consumersalike to use some of the followingstrategiesand toolsto
prioritize spending,developsavingshabitsand avoidrunning short of money:
• make a budget
• set up a fund for financial setbacks
• set savingsand investmentgoals
• make a plan to avoidusing creditwhen short of money
• choose appropriate mortgage terms,bank accounts and credit cards
• make a plan to pay down debt,includingoptionsto helppay downa mortgage more quickly

31
Acknowledgements
The Financial Consumer Agencyof Canada (FCAC) wouldlike to acknowledge the excellentworkof the
Agency staff who worked on arranging the Financial Well-BeingSurveyinCanada, analyzing the data
and reporting the results.In particular, we wouldlike to thank the followingmembersof the Research
and PolicyTeam: Dr. Rebecca Kong,Dr. Mathieu Saindon,Steve Trites, Michael Olsonand Bruno
Lévesque.
FCAC wouldalso like to acknowledge the important contributionsof Dr. Jerry Buckland of Menno
SimonsCollege,Dr. Jodi Letkiewiczof York University,Dr. Brenda Spotton Visanoof York University,
Tamara Kellyand John Eisner of Credit CounsellingServicesof AtlanticCanada, Inc., Laurie Campbell
and Adriana Molina of Credit Canada, and Michelle Pommellsof Credit CounsellingCanadafor
providingcomments on sectionsof the report.
Finally,we wouldlike to thank Prof. Elaine Kempsonand Dr. ChristianPoppe,who developedthe
questionnaire andmodel of financial well-beingandprepared the data file for our analyses.
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