Health and Wealth: Life Is Really Getting Complicated

Let’s face it: two of the most important areas of our lives - medical and financial - are becoming ever more complicated and worrisome.

A seemingly routine visit to your doctor can yield the revelation of an ailment you never knew you had.

The financial news can seem like a-headache-a-minute. Those who participate in the financial sector as clients rather than as professionals can be forgiven for thinking that the financial world -- and their own financial affairs -- continue becoming ever more complex and fraught with worries.

And they would be absolutely correct. At the same time, at least some financial advisors have more explaining to do and more often.

This year promises to be a stressful year for many individuals worried about their finances. In this corner, we usually discuss volatility in investments, the stresses it may cause and some strategies for coping with them.

However, as is often the case at the beginning of the year, financial organizations release polls and studies dealing with other financial issues including overall financial well-being. Some of the findings can be pretty shocking because they either reflect our own situations or the predicaments of those around us.

In one such poll, MNP Ltd., an insolvency firm, says that Canadians have become more worried about interest rates and personal finance compared since last Fall.

Just over half of the survey respondents say that they feel the effects of rising interest rates, an increase of 6% since September. With approximately the same increase, 31% said that they do not make enough to cover bills and obligations

Somewhat alarmingly, 45% did not believe that they could cover living expenses in the next year without going further into debt and 43% regret the debt they already have. In a list of alarming statistics, perhaps the most alarming one is that 46% of respondents said that they were within $200 of insolvency. That seems like a very difficult number to process mentally: 46% of respondents admit to being within a mere $200 of insolvency!

MNP likely sees the survey as a marketing tool but that does not mitigate the shocking knowledge that a little under half of survey respondents fear that they could not cover their basic living expenses this year without going further into debt. The statistics have many dimensions, including an individual’s own peace of mind, his or her ability to function well on the job, deal with family responsibilities, the housing market, the mortgage market, and other areas.

Related: Volatility, Europe & Your InvestmentsRelated: Changes in Latitudes, Changes in Attitudes: With Apologies to Jimmy Buffett

Meanwhile, numerous surveys in the United States also paint a troubling picture of the average American’s financial position. Northwestern Mutual’s 2018 Planning & Progress Study, released last year, said that the average American has approximately $38,000 in personal debt excluding mortgages and that ‘fewer people said they carry no debt’ compared with the previous year (23% compared with 27%).

Unfortunately, these statistics do not distinguish between individuals who became buried in debt through lack of financial smarts, happenstance or personal emergencies beyond their control. Nor do these statistics make clear the emotional toll of financial-planning-on-a-precipice. And for that matter, we have no idea of how many investors actually worry about the volatility of their investments.

The moral of this particular story, however, is that each individual’s financial life is becoming increasingly complicated. By and large, we each have only three options for dealing with this: trust in expert financial advice, take the do-it-yourself route and do huge amounts of research or a combination of the two. In the first option, the professional advisor has to demonstrate a sufficient financial pedigree -- whether in financial planning, bankruptcy counselling, insurance, tax planning, or estate planning. In the second option, the individual has to have sufficient discipline to undertake endless research and in the third option the financial professional has to first determine and then understand the separation between their responsibility and the do-it-yourself area.

In any event, keeping our financial health in tune - like our medical health - is going to continue getting increasingly complicated. What matters is how we deal with it.