Sunday, April 17, 2016

Is money as source of stress for you?

Financial stress is widely cited as the third reason for divorce behind basic incompatibility, infidelity. Money is also as a major cause of arguments for those in relationships.

A national study conducted for the Financial Planning Standards Council (FPSC) in 2015 found that 42% of Canadians stated that money was their greatest stress. It was the highest ranked stressor in the survey, significantly outranking work (23%), personal health (19%) and relationships (17%).

Women vs. Men
Women reported higher levels of financial stress than men. 51% of women said that worry about money caused them to lose sleep (compared to 40% of men); 30% reported feeling anxiety and 9% said they felt overwhelming levels of financial stress (compared to 17% and 3% respectively for men).

Many studies have found that women tend to be more concerned about money than men. Money and finance are areas that many women feel insecure about and intimidated by. As times have changed, with more women reporting taking on the role of primary money manager in the household, women have found themselves increasingly responsible for money and this has created stress for many.

Additionally, women are earning more and living longer than previous generations, leaving them with increased financial responsibility over a longer period of time.

13% of the people surveyed said they had no regrets about their past financial decisions but, for the other 87%, there were a number of things that they wished they had done differently:
  • 15% said they wished that they had started saving money or started saving earlier
  • 10% wished they had invested more/earlier/wiser
  •       6% thought they should have spent less
  •  5% regretted not having taken either a better job or a better paying job
  • 5% said they wished they had bought a house/condo/property
  • 5% regretted not getting a better education
One of the challenges of money management is that our best lessons often come with the benefit of hindsight. 

Unfortunately, when it comes to money, time is our biggest asset and the later we learn the importance of saving and understand the power of compound interest, the less opportunity we have to put what we’ve learned into practice.

Honesty about Personal Finances
Another interesting fact noted by the surveyors was that millennials (those born in the 80’s and 90’s) were much less honest about their personal financial situation than the national average. 33% of millennials reported lying to their friends about their financial situation, compared to the national average of 17%. 25% of millennials said they had lied to family members about finances and 15% said they had lied to co-workers (compared to a national average of 14% and 9% respectively).

Millennials have been raised in an era dominated by the rapid growth of electronic transactions, easy access to credit and a desire for instant gratification and they often carry significant amounts of student and consumer debt.

Shared Finances
61% of Canadians surveyed reported that they were in a relationship with shared finances. When they were asked how transparent they were with their partner about finances and how often they argued about money, an interesting correlation occurred. 58% of the couples who were most transparent about money reported rarely or never arguing about money, compared to only 30% of those couples that said they were not transparent about their finances.

With money being cited as one of the most common causes of arguments in relationships and financial incompatibility being one of the leading factor in divorce, it’s not surprising that couples who talked openly about money and finance, and who kept no financial secrets from each other, would have fewer money related arguments than those who took a more individual or secretive approach to their finances. While transparency about money isn’t always easy (especially for millennials!) if it cuts down on arguments, stress and conflict, then it might be worth considering as a key part of the recipe for relationship success.

The focus perhaps should be on how to conquer and reduce that financial stress. Rather than just making it a talking point, perhaps it’s time to actually take some definite action towards helping people (especially young people) feel more confident and comfortable with money and equipping them with the skills and knowledge to handle it effectively? 

No comments:

Post a Comment