Learning About Financial Health in Canada

Abstract

This paper applies cluster analysis to a unique set of data on the financial health of working Canadians. The data consists of eleven (continuous) years’ worth of responses to the highly regarded Canadian Payroll Association (CPA) survey of employed Canadians. Because of its longevity and consistency, access to the CPA data offers unique insights into Canadians’ financial circumstances and how, if at all, those circumstances have evolved over time. Our results suggest that each working Canadian falls into one of three categories, which we label financially comfortable, financially coping and financially stressed. We find that financial stress is both widespread (one third of all respondents are identified as stressed) and complex (stress is only weakly related to simple demographics such as age or income). All of our findings are remarkably consistent through time, and authenticate results reported by a growing body of research on financial health in Canada.

Keywords: cluster analysis, financial well-being