To no one’s surprise, money remains the top stressor for Canadians at 40%, for the sixth year in a row, according to FP Canada’s 2023 Financial Stress Index. With everything that’s going on, budgeting and planning for retirement feels pointless. Why is it so hard to make financial planning and investing decisions when you’re overwhelmed? Glad you asked.
Stress and finances: How to make smart decisions with your money by getting started
According to Samantha Sykes, a senior investment advisor with Raymond James, one of the reasons people have a lot of big decisions to make is that they don’t know where to start. Her clients, who range from mid-30s to early 70s, are often dealing with getting an inheritance, or they’ve just started making a decent salary, while also trying to balance getting married, buying a home and starting a family. “They’re feeling overwhelmed with bigger decisions about real money and real adulting. There are just almost too many decisions to make these days. So a lot of times, it’s just easier to leave it. It makes it easier for clients to press pause on making too many large financial decisions at the same time and walk away.”
Chantel Chapman, the CEO of financial literacy program, The Trauma of Money, agrees about having trouble finding a starting point. It’s common for Canadians to not know where to start when it comes to their money, choosing instead to avoid or ignore it.
“Financial avoidance is extremely common,” says Chapman from her home in British Columbia. She explains that avoidance comes from the belief that scarcity is present or the person is catastrophizing their situation in their mind. Triggers for this kind of “analysis paralysis” can include, for example, inflation (the past year has seen record numbers for rising costs on the Consumer Price Index) and feeling overwhelmed. As a result, to cope, the brain tries to survive the stress, which can take the shape of avoidance.
While burying your head in the sand is an option, it’s not a great one. “The problem with avoidance is that it’s a way to reduce pain in the moment,” Chapman says. “It gives us temporary relief, but there are negative consequences to avoidance.”
Those negative consequences are tangible. They include ignoring bills and statements, refusing to talk about money with friends, family and advisors, not knowing your credit score and not having a grasp on your net worth.
Alleviate stress and investigate your money narrative
Starting the financial planning and investing decision-making process means looking at your relationship with money, says Chapman. That means identifying the narrative that surrounds your relationship with money and why you might be avoiding it.
Chapman says to ask yourself the following questions to gain insight into your money story.