According to data performed by Canada’s Financial Wellness Lab and the National Payroll Institute, the number of persons experiencing financial stress has increased by 20% in the previous year, accounting for 37% of those with jobs.

Inflation, high interest rates, and an overall growing cost of living are combined to create a “perfect storm” in which individuals spend more, save less, and get into debt.

According to the Institute, spending, savings, and debt levels all influence whether a person is comfortable, coping, or struggling with financial difficulties. And, at the moment, economic conditions indicate that the news isn’t positive for many.

“The terrifying reality of this storm is that the contributing factors to financial stress are becoming more difficult than ever for Canadians to overcome,” said Peter Tzanetakis, president of the National Payroll Institute, in a statement. “They need to take immediate and urgent action.”

People who claim to be financially worried are finding it increasingly difficult to conserve money as prices rise. To make ends meet, 63% believe they must spend their full paycheque, while 30% must spend more than they make. As a result, many people are going into debt or depleting their savings to cover their daily costs.

As a result, 66 percent of individuals in financial distress say they live paycheck to paycheck. In comparison, only 2% of those who are financially secure and 9% of those who say they are coping are in the same situation.

All of this tension is beginning to affect people’s lives. More than half of stressed workers report feeling more isolated as a result of rising living costs. Furthermore, one in every two people report that stress is seeping into their relationships and is sensed by loved ones.

It’s also affecting their work performance. Forty percent of those who are financially anxious say their money worries prevent them from putting their best effort at work. They also spend around 33 minutes every day on business time worrying about their financial problems. Companies’ bottom lines are suffering as a result, with the Institute estimating a $45 billion annual toll in missed productivity.

Earning more money isn’t always a solution, even if the paycheck is in the six figures. Indeed, according to the Institute’s data, 35% of people experiencing increasing financial stress earn more than $100,000 each year.

“Earning more money may help some, but our analysis has consistently shown that how much one earns is not generally a determining factor concerning the financial wellness of working Canadians,” said Chuck Grace, managing director of Canada’s Financial Wellness Lab and professor at Ivey Business School and Western University.

Debt reduction appears to be beneficial. Consolidating debt while simultaneously using less of it can be a panacea for financial stress, especially since rising interest rates make carrying large debt burdens even more expensive. Grace cautions that adding more debt would only exacerbate financial issues.

Reducing reliance on debt also necessitates careful spending, even if it means skipping holidays or large-ticket items. In this manner, individuals may guarantee that they have enough money to cover necessities such as groceries and rent or mortgage payments.

But, according to Tzanetakis, the worst thing individuals can do is bury their heads in the sand and expect their financial difficulties to go away on their own. “Immediate action is needed, including making some difficult choices concerning financial habits, to weather what is still ahead,” stated the president.