Where to get help if you’re struggling financially (and mentally)  

What impact could money stress have on your well-being? Twenty-nine per cent of Canadians who are dealing with financial troubles say they are experiencing high levels of anxiety, and 25% report high levels of depression, Mental Health Research Canada (MHRC) found in a poll conducted in the spring of 2023. 

How does your financial wellness impact your mental wellness, and vice versa? 

Challenges—like job layoffs, mounting personal debt and the inability to afford everyday essentials due to rising inflation—can be major stressors for anyone.  

“The intersection or the connection between mental health and money is both cause and effect,” says Bruce Sellery, CEO of non-profit credit counselling agency Credit Canada. (Read more debt management tips from Credit Canada.) 

“Let’s say you’re one of the [thousands] of tech workers that have been laid off in the last year,” Sellery says. “For some people, they have resilience—they’ve got an emergency fund, they are good to go.” Others aren’t able to immediately bounce back, “either because they just don’t have the financial backstop or because they don’t have the resilience.” Sellery says this kind of stressful situation can lead to anxiety and depression—which can make it more difficult to find your financial footing again. 

If you are struggling with symptoms of depression or anxiety, that may make it harder for you to work and earn an income, he explains. This could then make it more challenging for you to pay your bills and manage your expenses. He also mentions that some people with attention-deficit/hyperactivity disorder (ADHD) may struggle to pay their bills or file their taxes on time, resulting in financial penalties.

What contributes to financial stress? 

Other financial stressors that can impact your mental health include carrying a high level of debt, such as credit card debt, or not being able to keep up with payments on a variable-rate mortgage because of rising interest rates and financial strain. 

Sellery says struggles like these can impair sleep, and possibly affect the ability to function at work. The average Canadian mortgage holder is paying $170 more per month in mortgage payments compared to pre-pandemic levels, according to a March 2023 Equifax report. 

The Bank of Canada (BoC) recently reported that mortgage payments will rise 20% to 25% for fixed-rate borrowers at renewal in 2025–2026. Variable-rate borrowers with fixed payments (the amount doesn’t change) may need to increase their payments by up to 40%, while those with adjustable payments (payment amounts change based on interest rates) have already seen increases of almost 50%. 

Circumstances like these can “create a vicious cycle,” suggests Sellery. In addition to affecting sleep and job performance, money stress could impact close relationships and perhaps worsen a financial situation even further. He says that people dealing with financial struggles also experience a sense of stigma or shame. “I think it does a disservice to people who find themselves in that circumstance, and it doesn’t help to give them access to the resources and the support [they need] to make different choices.” 

Statistics Canada reported that the “more vulnerable households increased their debt to make ends meet,” as inflation soared during 2022—those in the lowest income brackets had the highest increases in debt. The total consumer credit card balance rose over 15% year-over-year, surpassing $100 billion, due to increased usage and reliance on credit cards, according to the Equifax report.

What are the steps to paying off debt?

If you’re dealing with multiple sources of debt, Sellery says it’s important to start with a snapshot of your current financial situation.

First, create a chart or spreadsheet and fill in the lenders, the amounts you owe, the interest rates and the minimum monthly payments. Calculate the total amount you owe.

The second step is figuring out how you’re going to address the debt, he says. That might mean increasing your cash flow or cutting expenses. To cut expenses, Sellery recommends looking at ways to reduce your discretionary spending (a.k.a. spending on non-essentials other than rent or bills). To increase your income, consider taking on an extra shift at work, getting a second job or a side hustle, or renting out a unit in your house, for example. Once you have a surplus of funds (extra money you don’t need for essentials), you can start to pay off debt using either the avalanche (paying of highest interest debt first) or snowball method (pay off debt from lowest to highest amounts). (Read more about these two strategies to pay down debt.)

Where can you get help for debt? 

If you are struggling financially or dealing with a high level of debt and don’t know what to do next, you have options. Sellery recommends either accessing your workplace employee assistance program (EAP) for financial counselling services, if you are employed, or getting a free financial assessment from a non-profit credit counselling agency, like Credit Canada, Credit Counselling Canada or the Credit Counselling Society. 

Credit counselling agencies can connect you with services appropriate for your financial situation, and they can help you develop a plan to pay off your debt. At Credit Canada, Sellery says: “Counsellors are trained to identify the options that are available [to Canadians] and then provide recommendations.” Some of the solutions may include: negotiating loan interest rates with a lender, or creating a debt consolidation plan or a consumer proposal, depending on your circumstances and eligibility. (Some agencies charge a fee for these services.)

Another option is to consult directly with a licensed insolvency trustee (LIT), as they are government-certified from the Office of the Superintendent of Bankruptcy and are authorized to handle consumer proposals or deal with creditors to negotiate the terms of your debt. LITs don’t just deal with bankruptcy filings, however—they can also provide budgeting support or help you create a plan to consolidate your debts. LITs usually provide a free initial consultation, and their fees are determined by the federal government. Find a licensed insolvency trustee near you.

Where can you get help with stress and other mental health issues?

Sometimes, as Sellery mentioned, money struggles can be a symptom of mental health issues. If you are experiencing feelings of anxiety, depression or ongoing stress, consider reaching out for help. Your mental health can impact your ability to function and make it harder to work on improving your finances or accomplish everyday tasks. (See MoneySense’s guide to free and low-cost mental health resources.) 

Why it’s important to have a financial plan 

Creating a financial plan can help you understand your current situation—the money you have coming in and out—and ways to improve it, like budgeting, increasing your income, and more. “Having a plan gives you confidence,” says Sellery. He says that a big part of money stress is a sense of being overwhelmed, and not knowing where to start. 

A 2019 study by the National University of Singapore found that lower-income participants who had more of their debt accounts paid off experienced improvements in cognitive functioning, and were 11% less likely to experience anxiety. These respondents were also 10% less likely to display present bias— which is the habit of prioritizing rewards in the current moment rather than putting emphasis on the long-term consequences or effects of your decision-making (think impulse buys or splurging rather than saving or paying off your debt.)

If debt and mental health issues still prevail after you start to get your finances under control, meeting with a mental health professional may be beneficial. 

How to make a financial plan

There are many ways to create a financial plan. One of them is to use software or financial apps to help you track where your money goes. But if you’re feeling like you’re in over your head, consider meeting with a financial advisor. Read our tips on how to choose a financial advisor based on your needs, as there are different types of advisors including fee-only planners, financial analysts and advisors who work for banks or credit unions. 

If you don’t have the budget to pay for a consultation with an advisor, you may be able to speak to one for free. The Financial Planning Association of Canada (FPAC) offers no-charge, one-time meetings with a Certified Financial Planner volunteer via Zoom or phone. Complete the intake form.

The bottom line: If you find yourself dealing with money troubles, you have options to improve your financial—and mental—wellness.  

Read more about budgeting:

• Debt demystified: How to calculate your debt
• How to calculate your debt-to-income ratio—and why you should know this number
• How to build credit history in Canada
• How long do debt collectors try to collect in Canada?

About Margaret Montgomery

Margaret Montgomery is a former MoneySense editorial assistant and MoneyFlex columnist. She studied business administration at Wilfrid Laurier University and journalism at Centennial College.

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