As many as half of Canadians are living paycheque to paycheque, according to experts with Equifax, one of the two major credit bureaus in Canada. More specifically, these Canadians are only $200 away from being unable to pay their bills. Just one missed paycheque can spell financial disasters for those relying completely on every paycheque to survive.
Why are so many Canadians in this predicament, and what can be done to alleviate the situation?
What Does It Mean To Live Paycheque To Paycheque In Canada?
Living paycheque to paycheque means that a person depends entirely on their income from their next paycheque to pay for all expenses. This means there’s no financial wiggle room for other expenses or savings. Every dollar from their paycheque goes towards immediate needs, such as housing, utility bills, groceries, and other essentials, with no money left over.
As a result of this situation, living paycheque to paycheque can cause significant financial stress and risk. Any unexpected expenses or a sudden income loss can lead to immediate financial ruin.
Why Are So Many Canadians Living Paycheque To Paycheque?
There are a few key reasons why so many Canadians are finding themselves relying on their next pay to keep them financially afloat:
Mounting Debt
Many Canadians are struggling with debt, making it difficult to cover their ongoing bills and save money. According to the latest data from Equifax, consumer debt levels increased to $2.5 trillion in the second quarter of 2024. That’s a 4.2% increase year-over-year.
The main contributor to this mounting debt is credit cards, with the level of outstanding credit card balances currently sitting at $122 billion. On average, credit card holders in Canada are carrying more than $4,300 in credit card debt. Given the high interest rates that credit cards are known for charging, it can be difficult for consumers who carry high credit card balances to pay down this debt.
Pricey Housing Costs
The cost of mortgages, rent, and other living expenses has skyrocketed over recent years, causing Canadians to spend a bigger portion of their income on housing. This leaves less money left over for saving and leisurely spending.
For example, average rent prices in Canada saw an increase of 8.6% in 2023 and 12.1% in 2022, despite prices cooling slightly over the past few months. This is especially problematic when the cost of other living expenses, such as property taxes, utility bills, and food, also increase at a much faster pace than wage increases.
Lack Of Access To Affordable Credit
Many Canadians, particularly those in the low- to moderate-income category, are often turned away by traditional lenders and therefore resort to high-cost lenders for loans and credit products. This leaves them paying a lot more for loans and in much deeper financial issues.
Not only that, but predatory lenders often prey on more financially vulnerable consumers, putting them in an even worse financial situation.
Poverty Vs. Wealth Gap
The gap between the wealthy and the poor is widening across Canada and now stands at 47 percentage points, the widest gap since 1999.
According to Statistics Canada, the top 20% of earners hold over two-thirds of Canada’s wealth, while the bottom 40% comprise just 2.8% of the country’s wealth. This gap is largely due to factors such as inflation, high interest rates, and investment gains for the richest Canadians.
Resources To Help Stop Living Paycheque To Paycheque In Canada
If your current finances are barely covering your bills every month, there are resources and strategies available to help you get out of the paycheque-by-paycheque rut:
Make A Budget
Creating and sticking to a budget can help you break the cycle of living paycheque to paycheque. For starters, a budget gives you a clear picture of your income, expenses, and spending habits, helping you pinpoint where your income is going each month.
It also helps you keep tabs on your spending, so you can focus first on essential expenses and scale back on non-essential ones. This can open up more money to put towards things like saving for an emergency or retirement.
There are many budget apps available to help you budget and keep track of your spending.
| YNAB | Learn more |
| MyDoh | Learn more |
| Pocketsmith | Learn more |
| Wally | Learn more |
Make Every Dollar Count
Being mindful of how you spend every dollar you earn can help ensure that you focus on crucial expenses, like groceries and housing. You can also use coupons and discount codes, compare prices, and price match to stretch your dollar even more.
Save For Emergencies
Saving for an emergency fund provides a financial cushion to fall back on in the event of an unexpected expense. This can help you avoid the need to rely on credit cards or loans while helping you stay on track with your budget and prevent falling further into debt.
Stop Using Credit
By stopping the use of credit, you can reduce or avoid accruing interest, which can help reduce overall debt. This frees up more of your income to pay for essential expenses and savings. When you don’t rely on credit, you’re less likely to spend too much. Plus, you’ll be more incentivized to live within your means, which can help you reduce your reliance on each paycheque.
Learn more: How To Save Money And Pay Off Debt
Use Government And City Resources
Local and federal governments offer various programs to help Canadians struggling financially. If you’re having financial troubles, you should look into what’s available and exhaust all possible options. That said, this may often be easier said than done.
To help you find these resources, use online tools like www.211.ca. You can narrow down your search by location and the specific resource, such as the following:
Educational And Training Resources
To upgrade your skills for better employment opportunities, look into training resources in your area. Here are a couple of examples:
- Better Jobs Ontario: Provides skills training and financial support to eligible individuals who are unemployed or underemployed
- Prospect: A not-for-profit organization that helps Albertans overcome barriers to employment.
Financial Assistance Programs
Various levels of government across Canada offer financial assistance programs to residents. Find one in your province and city that you may qualify for. Here are a few examples:
- Low-income Energy Assistance Program (LEAP): Provides emergency financial help to low-income households in Ontario struggling to pay their energy bills.
- Winter Utility Reconnection Program: Helps low-income utility customers in Alberta reconnect to their utilities during the colder months of the year.
Food Banks
Given the sky-high cost of groceries these days, more Canadians are finding themselves using the services of food banks. Fortunately, food banks are located all across Canada, with each serving its local residents. You can find food banks in your area by conducting a simple online search, or by using your local www.211.ca resource.
Programs For People With Disabilities
Several financial programs are available in Canada that offer financial support for people with disabilities, such as the following:
- Child Disability Benefit (CDB): The CDB is a tax-free monthly benefit for families caring for a child with a disability.
- Disability Tax Credit (DTC): The DTC is a non-refundable tax credit for individuals with a physical or mental impairment.
- Provincial Disability Benefits: Each province and territory may have its own financial support programs for those with disabilities, including income and employment support, and health care benefits. Here are a few examples:
- Ontario Disability Support Program (ODSP): The ODSP provides financial and employment support to qualifying Ontario residents with disabilities.
- Persons with Disabilities (PWD) Benefit: Offers financial assistance to low-income BC residents with severe disabilities.
- Alberta Assured Income for the Severely Handicapped (AISH): The AISH provides financial support to low-income Alberta residents with disabilities.
Bottom Line
Living paycheque to paycheque can be a very stressful and challenging experience, but there are things you can do to break the cycle and avoid getting yourself into this situation in the first place. These include creating a budget, building an emergency fund, and looking for ways to increase your income. Consistent changes, no matter how small, can result in great improvements over time.
