Data points to persistent disparities in both income and wealth
Net savings declined for Canadian households across all income groups in the second quarter of 2025, marking the first time this has occurred since inflation peaked in 2022, according to new data from Statistics Canada (StatCan).
This trend persisted even as inflation eased and the Bank of Canada’s policy rate fell to 2.75%.
The decreases were greater among the lower income brackets compared to the higher ones.
“Net saving worsened the least for higher income households despite weak wage gains, as their net investment earnings benefited from interest rate reductions,” said StatCan. “Higher income households tend to hold balances on variable rate credit products such as lines of credit, rather than fixed rate products such as credit cards.”
Canadians’ concerns about their personal finances have surged amid mounting economic uncertainty and market volatility, according to a recent report from BMO Financial Group. And despite a modest rebound in wage growth in recent years, Canada’s lowest-income households continue to fall behind, as rising living costs outpace earnings and compound affordability pressures, reported the Canadian Centre for Policy Alternatives (CCPA).
Disparities, debt service ratio
The data also highlight persistent disparities in both income and wealth. The income gap—the difference in the share of disposable income between the top 40% and the bottom 40% of households—remained at a record high of 48.4 percentage points in the second quarter, unchanged from the previous year.
Disposable income grew by an average of 3.9% year-over-year, down from 5.9% in the same period last year. The lowest income households saw a 5.6% increase in disposable income, driven mainly by government transfers rather than employment income, while the highest income households experienced a 3.1% rise, largely due to weak wage growth.
Wealth disparities also widened. The top 20% of households now hold nearly two-thirds (64.8%) of Canada’s total net worth, averaging $3.4 million per household, while the bottom 40% account for just 3.3%, averaging $86,900.
The wealth gap between the top 20% and the bottom 40% reached 61.5 percentage points, up 0.2 points from a year earlier. The least wealthy households saw their net worth rise by 4.7%, but this was solely due to gains in financial assets and was outpaced by the wealthiest, who benefited most from strong financial markets.
Additionally, households aged 35 to 44 years had the highest debt service ratio (DSR)—which is based on the value of total interest payments on credit market debt as a share of disposable income—at 11.2% in the second quarter of 2025. However, they decreased their DSR (-1.0 percentage points) at the fastest pace of any age group relative to a year earlier, as their income grew strongly while interest paid on debt declined.
“Although DSRs for each age group were lower in the second quarter of 2025 relative to a year earlier, they remained well above rates that prevailed prior to the Bank of Canada's efforts to manage inflation starting in 2022,” said StatCan.
Amid these financial challenges, employers need to focus on workers’ financial wellbeing, according to the Financial Consumer Agency of Canada.
“Many employers already recognize the advantages of providing pension and retirement savings plans, wellness programs, and health and other benefits to their employees. Recently, mental health has become an important focus in the workplace too. A financial wellness program is a natural extension of these existing benefits and complements other employee programs,” the government agency said.
It added: “By implementing financial wellness initiatives in your workplace, you will be empowering your employees. They will feel more in control of their money and have improved financial, mental and physical health. This will lead to a more productive workplace and a more engaged workforce. It can also result in increased profits and lower costs for your business and enhance your reputation as an employer of choice.”
While Canadians’ confidence in the economy is improving, housing affordability remains the top concern for many, according to a previous Leger report.
