Seven insights to enhance financial wellness

Photo by Andrea Piacquadio

by Tim McAlpine, Founder & CEO
Currency Marketing

​The importance of financial wellness is an issue that crosses our shared Canada-United States border. At Currency Marketing, we are committed to advocating for financial literacy and wellness. As we head into a new year, here's a compilation of facts and figures that highlight the significance of financial literacy programs and their potential to transform lives in the future.

1. The state of financial literacy
A survey by the TIAA Institute and the Global Financial Literacy Excellence Center reveals that American adults correctly answer only 50% of financial knowledge questions. In Canada, nearly two in five adults (39%) rate their financial literacy as poor.

Those with low financial literacy are more likely to struggle to make ends meet, lack emergency savings and dedicate a substantial amount of time to managing financial challenges. Conversely, high financial literacy is a valuable skill for both individuals and their financial institutions.

2. Tackling credit card debt
Credit card debt in North America has reached all-time highs, with U.S. credit card balances exceeding $1 trillion and Canada’s credit card balances going over $100 billion.

While inflation plays a role, poor money management skills are a significant contributor. Financially literate individuals tend to make better financial decisions, benefiting both themselves and the credit unions they belong to.

 3. A looming retirement crisis
A 65-year-old retiree can now expect to live to age 85. The average monthly Social Security check is $1,800 in the U.S. and $772 in Canada. Average monthly household expenses for retirees are $4,300 in the U.S. and $2,600 in Canada.

However, according to a survey by the Healthcare of Ontario Pension Plan, 44% of Canadians have less than $5,000 saved for retirement. In the U.S., 40% of baby boomers have no retirement savings, as reported by The Hill. Retirement financial literacy pertains to understanding retirement planning tools, benefits and resources.

4. The proliferation of payday lenders
An estimated 12 million Americans take out payday loans annually, with around 612,000 Canadians also resorting to them. Payday loans come with astronomical annual interest rates, averaging 400% (reaching 662% in Texas). Borrowers of payday loans are typically lower-income or unbanked individuals.

Education is key to promoting more affordable and less financially hazardous borrowing options, which credit unions can offer.

5. Financial stress in the workplace
According to PwC, 57% of employees cite finances as the leading cause of stress, turning to their employers for support. In the past year, financial stress has negatively impacted sleep (56%), mental health (55%), self-esteem (50%), physical health (44%) and relationships at home (40%).

Structured financial education programs delivered by credit unions in workplaces offer an opportunity to enhance various strategies, from retail and business banking to member acquisition and community outreach.

6. Financially vulnerable and living paycheck-to-paycheck
Emergency savings are dwindling, with 25% of Canadians unable to cover a $500 unexpected expense and 22% of U.S. adults have no emergency savings. A staggering 46% of Canadians and 42% of Americans live paycheck to paycheck, emphasizing the need for improved financial resilience.

Credit unions can play a crucial role by providing tools and education on budgeting and emergency fund accumulation.

7. Barriers to homeownership
Approximately half of Canada's non-homeowners are unlikely to enter the housing market. 50% of U.S. adults have encountered obstacles to homeownership, with rising home prices, lack of funding for down payments or closing costs, existing debt, limited budget options and poor credit history being the primary barriers.
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Financial literacy is a critical factor in homeownership, as it equips individuals with the necessary knowledge to become successful homebuyers.

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