For Sarah Mehendale, a 34-year-old graphic designer in Vancouver, the math no longer adds up. “I’ve cut everywhere I can think of—no takeout, no new clothes, making coffee at home. But my rent just jumped again, and I’m still falling behind on savings.“
Sarah isn’t alone. As we approach 2025, Canadians across demographics are experiencing a particular kind of financial insomnia—one where balancing basic needs against future security feels increasingly impossible.
According to the latest Financial Stress Barometer from the Canadian Financial Planning Association, 72% of Canadians report losing sleep over money matters—up from 58% in 2022. What’s driving this collective anxiety, and why does it persist even as headline inflation numbers moderate?
The answer involves a perfect storm of housing costs, stagnant wages, and shifting economic fundamentals that have created what economist Patricia Croft calls “a sustained affordability crisis unlike anything we’ve seen in generations.”
Let’s break down what’s actually keeping Canadians awake at night.
Housing has transitioned from dream to nightmare for many. The average home price in Canada sits at $723,500—requiring a household income of approximately $171,000 to qualify for a mortgage with current interest rates. Yet the median household income hovers around $92,000.
“We’ve created a situation where home ownership is mathematically impossible for the majority of working Canadians,” explains Tsur Somerville, real estate economist at UBC. “And rental markets offer little relief, with average one-bedroom apartments in Toronto hitting $2,550 monthly.”
This housing pressure extends beyond major urban centers. Kingston, Ontario resident Michael Delaney, a 41-year-old teacher, describes how “housing stress has moved to smaller communities. My salary hasn’t changed much in five years, but my housing costs are up 47%.”
The savings gap represents another anxiety point. TD Bank’s Consumer Financial Health Study reveals that 43% of Canadians have less than $5,000 in emergency savings—a particularly troubling figure given that financial planners typically recommend having three to six months of expenses available.
“We’re seeing people making $100,000 who are effectively living paycheck to paycheck,” notes financial counselor Jasmina Ibrahim. “When basic needs consume so much income, building financial resilience becomes nearly impossible.”
The debt burden compounds these concerns. The average non-mortgage debt per Canadian consumer reached $21,300 in late 2023. More concerning is that interest rates have pushed many to more expensive forms of borrowing. Credit card balances have risen 16.8% year-over-year, with more Canadians carrying balances they cannot fully pay off.
Kamal Pushkar, a 56-year-old project manager in Calgary, embodies this struggle: “I never thought I’d be using credit cards for groceries at this stage in my career. But between helping my kids with university and managing my own expenses, the math just doesn’t work anymore.”
Retirement fears have also intensified. A Manulife survey finds that 67% of Canadians are not confident they’ll maintain their standard of living in retirement—up from 48% in 2019. This represents a profound shift in the Canadian dream.
“We’re witnessing the death of the traditional retirement model,” explains retirement security expert Alexandra Macklin. “Many Canadians now expect to work well into their 70s not by choice, but necessity.”
For millennials and Gen Z, retirement anxiety takes a different form. “I can’t even think about retirement when I’m struggling with today,” says Montrealer Jean-Philippe Tremblay, 29. “Between student loans and housing costs, retirement savings feel like a luxury I can’t afford.”
The psychological toll of this financial stress manifests in both mental and physical health. Dr. Ravi Joshi, a clinical psychologist specializing in financial anxiety, observes: “Money worries activate the same brain regions as physical pain. We’re seeing increased rates of depression, anxiety, and stress-related conditions directly tied to financial insecurity.”
This health impact creates a vicious cycle, as medical issues can further strain already precarious finances. According to the Canadian Mental Health Association, 28% of Canadians report missing work due to financial stress, creating additional income vulnerability.
What makes this situation particularly challenging is that traditional financial advice often feels disconnected from today’s economic realities. “Being told to ‘cut back on lattes’ when housing consumes 50% of your income feels like being advised to use a bandage for a broken leg,” notes financial educator Priya Sharma.
Financial literacy remains important, but experts increasingly acknowledge systemic issues beyond individual control. Gordon Cleveland, economist at University of Toronto, points to policy failures: “We’ve allowed housing to become an investment vehicle rather than a basic need, created an inadequate childcare system, and permitted wage stagnation in essential sectors.”
Some Canadians are adapting through unconventional arrangements. Multi-generational housing has increased by 45% since 2019. Co-ownership arrangements and housing cooperatives are seeing renewed interest. Job-hopping has become a necessity rather than a choice for many seeking wage growth.
“The traditional financial playbook doesn’t work anymore,” explains behavioral economist Martin Chen. “Canadians are having to write new rules for survival in real-time.”
Looking ahead, potential solutions require both individual and policy-level changes. On the policy front, advocates point to housing reform, childcare expansion, and interest rate stabilization as critical interventions.
“We need to make financial stability achievable for average Canadians again,” argues Stephanie Williams of the Canadian Centre for Economic Analysis. “That means reconnecting housing prices to local incomes and ensuring basic needs don’t consume unsustainable portions of household budgets.”
For individuals, financial planners suggest focusing on what’s controllable: increasing income streams, building emergency funds even in small increments, and being strategic about debt management.
“Start with psychological security, not just financial security,” advises financial counselor Ibrahim. “Even a small emergency fund can significantly reduce financial stress.”
As 2025 approaches, one thing is clear: Canada’s financial stress epidemic requires both individual resilience and systemic reform. Without addressing both, those sleepless nights will likely continue—with consequences extending far beyond personal balance sheets to the very fabric of Canadian society.
