The cost-of-living squeeze is no longer showing up only at grocery checkouts, gas stations and monthly bill payments. It is increasingly following Canadians into the workplace, affecting concentration, confidence and, for some employees, their ability to get through the workday.
TELUS Health’s Q2 2026 Mental Health Index found that 63% of Canadian workers identify the cost of living as their primary source of financial stress, while 28% do not have emergency savings sufficient to cover basic needs. Based on responses from 3,000 employed adults across Canada, the findings point to a workforce that may be earning more in nominal terms but remains vulnerable to everyday expenses, unexpected bills and longer-term financial uncertainty.
Cost of Living Has Become the Overwhelming Financial Worry
Cost of living stood far above every other financial concern measured by TELUS Health. While 63% of workers selected everyday living costs as their main financial stressor, only 12% pointed primarily to retirement savings and 8% identified emergency savings. That gap is significant because it suggests that immediate household expenses are demanding more attention than financial objectives that might normally dominate long-term planning. Housing, food, transportation and utilities have become difficult to treat as background expenses when even modest increases can absorb a meaningful portion of each paycheque.
The result also fits a broader pattern in Canadian financial research. FP Canada’s 2026 Financial Stress Index found that money remained Canadians’ leading source of stress, ahead of health, relationships and work. Grocery prices were the most commonly identified external financial pressure in that research. The two sets of findings measure somewhat different things, but together they suggest financial anxiety is being driven less by distant hypothetical risks and more by the recurring cost of maintaining an ordinary household.
Inflation Has Eased From Its Worst Levels, but the Pressure Has Not Disappeared
The latest inflation data help explain why workers can remain financially uneasy even when some economic indicators have improved. Statistics Canada reported that the Consumer Price Index was 3.0% higher in July 2026 than a year earlier. Food purchased from stores was up 3.1%, while transportation costs were 7.8% higher. Inflation describes the rate at which prices are rising, not a return to the price levels households remember from several years ago. Slower inflation therefore does not automatically restore lost purchasing power.
Wages have been moving higher as well. Average weekly earnings reached roughly $1,344 in June, a 3.4% increase from a year earlier. On paper, that growth exceeded the July headline inflation rate, although the measures cover different months and average experiences vary considerably between workers. A household facing rising rent, groceries, insurance and transportation costs can feel considerably more stretched than national averages imply. The Bank of Canada has likewise noted that concerns about high prices and economic uncertainty continue to weigh on spending intentions.
The Emergency-Savings Gap Leaves Little Room for a Shock
The 28% of Canadian workers without enough emergency savings to cover basic needs represent one of the more consequential findings in the TELUS data. Emergency savings are not simply another investment goal. They provide a buffer when income unexpectedly falls or an unavoidable expense suddenly appears. A vehicle repair, urgent home expense or period without employment can become a borrowing problem almost immediately when there is no cash reserve available.
TELUS found a substantial wellbeing divide between employees with and without that buffer. Workers lacking emergency savings recorded a Mental Health Index score of 49.1, compared with 69.7 among those who had savings, and were nearly three times as likely to report that their financial circumstances were hurting their productivity. Statistics Canada reported a national household saving rate of 3.7% in the second quarter of 2026, but that figure is an economy-wide average and saving rates tend to be higher among wealthier households. The Financial Consumer Agency of Canada recommends eventually building an emergency reserve equivalent to roughly three to six months of regular expenses, while acknowledging that reaching that level can take considerable time.
Money Stress Is Already Reaching the Workplace
Financial pressure becomes an employer issue when workers cannot leave it at the door. TELUS found that one in five Canadian employees said financial stress had directly hurt their productivity. Five per cent reported missing work because of financial anxiety, while other workers described difficulty concentrating or reduced engagement. Those percentages can look modest in isolation, but spread across a large organization they can translate into recurring interruptions, unfinished work and additional strain on colleagues.
The Financial Consumer Agency of Canada has also identified financial stress as a workplace productivity issue, noting that money worries can reduce focus, increase absence and contribute to lower morale and engagement. Consider an employee who spends the first hour of a morning trying to rearrange bill payments after an unexpected repair. That situation is personal, but its effects can easily enter the workplace through distraction and lost time. TELUS’s findings therefore move financial wellbeing beyond the traditional discussion about salaries. Workers can receive regular pay and still experience financial instability severe enough to interfere with performance.
Financial Anxiety Is Closely Connected With Mental Health
The scale of financial worry extends beyond workers who describe money as a constant problem. TELUS reported that 69% of Canadian employees feel worried or anxious about their financial circumstances at least some of the time. Thirty-five per cent experience that anxiety often or always, while 12% said they always worry about money. That last group recorded a Mental Health Index score of 39.5, placing them deep within the Index’s distressed range.
Money problems and mental health can also reinforce one another. Financial anxiety may contribute to poorer sleep, difficulty concentrating and lower engagement, while those same pressures can make it harder to organize finances, pursue additional work or make complicated financial decisions. Federal financial-wellness guidance similarly links financial stress with sleep problems, poorer self-reported health and mental health challenges. None of that means every person worried about bills will develop a mental health condition. It does show why affordability problems can have consequences considerably broader than the balance remaining in a bank account at the end of the month.
Younger Workers and Parents Are Carrying More of the Strain
Financial pressure is not evenly distributed throughout the workforce. TELUS found that employees under 40 were three-and-a-half times more likely than workers over 50 to say financial stress had negatively affected their productivity. Parents were also 80% more likely than non-parents to report a productivity impact from financial strain. Those differences matter because younger workers are often attempting to establish several expensive parts of adult life at the same time, including housing, transportation, childcare and long-term savings.
The result does not mean older workers are insulated from financial stress. Retirement readiness, health expenses and mortgage obligations remain important concerns later in working life. Younger employees, however, generally have had less time to accumulate assets and emergency reserves. Parents may also have fewer expenses that can be postponed when a budget tightens. Childcare, groceries and housing costs cannot simply be eliminated for a difficult month. The combination can turn what looks like a manageable household budget into one that has very little capacity for error.
Caregiving Is Creating a Second Financial Squeeze
The financial strain becomes more complicated for employees supporting relatives in addition to themselves. TELUS reported that 27% of Canadian workers were providing financial support or care to either adult children or aging parents. Among those caregivers, 37% said the responsibility negatively affected their finances, while 32% reported a negative effect on their mental health. Fifteen per cent reported an impact on work productivity.
This is the financial reality often associated with the so-called sandwich generation: workers can be simultaneously responsible for their own household, children who remain financially dependent longer and parents requiring additional support. The costs do not always arrive as one dramatic bill. They can accumulate through groceries, transportation, housing assistance, medical-related expenses and reduced working hours. That makes caregiving pressures particularly difficult to spot from salary data alone. An employee with a relatively stable income may still have little discretionary money because that income is supporting several people. For employers, flexible benefits and caregiving resources can therefore address financial pressures that a conventional compensation discussion may overlook.
Workplace Savings Plans Are Not Delivering Their Full Value
Another finding points to a different kind of financial vulnerability: many workers have access to savings programs but do not fully understand them. TELUS found that 60% of employees contributing to a workplace retirement or savings program lacked a strong understanding of how it worked. Employees reporting no understanding of their plan had a Mental Health Index score 19.3 points below that of workers who understood their plan well.
That knowledge gap matters because a benefit provides limited reassurance if an employee does not understand contribution levels, matching arrangements, withdrawal rules or the role the plan plays in retirement. The appetite for assistance appears substantial. TELUS found that 63% wanted employer-provided resources, communication or support involving pensions, retirement and savings—the most requested category of financial support in its research. Some employees also wanted help with investing, taxes, emergency savings and debt. The implication is that employers may not need to invent entirely new benefits before improving financial wellbeing. Better explanations of benefits workers already possess could be a meaningful starting point.
Mortgage Renewals and Household Debt Keep Budgets Vulnerable
Housing debt remains another important part of the financial backdrop. The Bank of Canada says Canadian household indebtedness is still elevated even though it remains below its 2022 peak. Most households have continued to handle higher borrowing costs, but the central bank has emphasized that financial resilience differs sharply between households. Those carrying large debts with limited savings have much less flexibility when an unexpected expense or loss of income occurs.
Mortgage renewals continue to matter as well. The Bank estimates that over the coming 12 months, the final group of five-year fixed mortgages taken out during the pandemic at unusually low rates—representing about 12% of outstanding mortgages—will renew. On average, those borrowers are expected to experience payment increases of about 15%. Most are expected to manage the adjustment, but higher housing payments can still reduce the money available for emergency savings or other spending. That helps explain why financial stress can remain elevated even when national household balance sheets appear broadly stable.
Employers Have a Role Beyond Simply Raising Pay
The findings do not imply that employers can solve Canada’s affordability problem. Companies cannot control grocery prices, housing supply, interest rates or national inflation. They can, however, influence how easily employees understand and use the financial resources already available through work. TELUS found strong demand for better retirement and savings information, while federal guidance encourages workplaces to treat financial wellness as part of broader employee wellbeing.
Useful support can range from clearer pension information and financial-literacy education to confidential counselling, emergency-savings guidance and tools that help employees understand benefits. The goal is not for an employer to manage workers’ private finances. It is to reduce unnecessary complexity and make existing support easier to access. For employees already struggling to absorb ordinary expenses, even small improvements in financial confidence can matter. The larger message from the TELUS findings is difficult to miss: cost-of-living pressure has become a workforce issue, and the consequences increasingly reach beyond household budgets into mental health, attendance and productivity.
