How to cope with the emotional burden of financial stress

Nearly one in three Canadians experienced financial strain in 2024, compared to one in five in 2021¹. Life satisfaction declined by 5% over the same period, suggesting that money can take a heavy toll on mental health.

To better understand this trend, Dr. Katy Kamkar, clinical psychologist at the Centre for Addiction and Mental Health, which Manulife supports through its investment in the Women’s Health Research Group, part of the womenmind initiative, explains what causes financial stress and how it can affect mental health. Guy Tardif, financial security advisor at Assurance VAM offers some possible solutions.

Chronic financial stress is associated with long-term physical and mental health risks, explains Dr. Kamkar. Physically, it can affect energy levels, blood pressure, concentration², sleep, and even daily activities³.

“Not knowing what comes next financially is a major source of stress”, says Dr. Kamkar. “The brain has difficulty settling when basic needs feel unstable. This may lead to hypervigilance and rumination, making it harder to relax.”

Recent studies⁵ show that Canadians are particularly concerned about the cost of housing, groceries, and everyday expenses. A detailed budget—especially when it is prepared with the help of a financial advisor—can provide clarity and ease the mental load.

“Once you establish a budget, monthly expenses like rent or mortgage payments rarely change. It’s really the weekly expenses—like groceries, gas, going out, and spontaneous purchases—that we need to keep a close eye on,” says Tardif.

Financial stress is especially harmful when, despite their best efforts, people still feel they will never be able to get back on their feet. “That sense of helplessness can intensify anxiety, shame, and hopelessness,” says Dr. Kamkar.

An annual balance sheet review—similar to what businesses use—can provide a clearer picture and help track progress over time. Guy Tardif recommends this approach which better illustrates how certain loans including a mortgage, are tied to assets that increase wealth. For example:

• A household has $300,000 in assets (home, vehicles, etc.) and $350,000 in liabilities (mortgage, car loan, credit card, etc.), for a net position of  -$50,000.
• The following year, their assets increase to $320,000 as their property value improves, and careful budgeting management allows them pay back some of their debt (which now totals $320,000). Their net position is now $0, meaning the family has increased its wealth by $50,000 over the year.

Having a financial advisor who helps you create your own balance sheet can help you see how you’re building wealth and paying off debt, and make you feel more confident about your overall financial journey.

Money is not only practical; it’s also emotional and social.

“Many people connect finances to competence, success, independence, or being able to care for their family,” says Dr. Kamkar. “Financial struggle can lead to feelings of shame, guilt, or a sense of failure, even when major factors are beyond our control,” says Dr. Kamkar.

Guy Tardif encourages people to gain a better understanding of their own short-term, medium-term, and long-term plans—often with the support of a financial advisor. “It all comes down to our choices and our goals,” he explains. “By understanding our expenses, we can prioritize certain projects.”