Over eight in 10 Canadians concerned their income isn't keeping pace with inflation
Financial hardship has become a common theme throughout Canada, based on the results of a recent study,
Six in 10 (60%) Canadians say people living paycheque to paycheque is today’s norm, according to a report from H&R Block Canada.
And while 26% say that the cost of living will shift down the road, 73% say that Canadians overall will suffer down the road by not having enough money put aside.
While many Canadians are saving money for retirement, many seem to be doing so without a formal plan, according to a previous report from IG Wealth Management.
Are people struggling financially in Canada?
Managing their money is a problem for many Canadians, according to H&R Block Canada’s survey of 1,505 Canadians, conducted in February.
Fewer than four in 10 (37%) Canadians say they're able to live within their income level, and just 27% feel good about their personal financial situation.
And about three-quarters (73%) say that cost-of-living increases have made it difficult to afford everyday expenses such as groceries, gas and household essentials, among others.
Over eight in 10 (82%) are concerned that their income isn't keeping pace with inflation.
One in four (24%) say they struggle to make ends meet, and 64% say that despite making a decent salary, they're worried about paying their bills.
Close to eight in 10 (78%) also say they're worried about the cost of living, with 77% saying they plan to reduce their spending.
About 19.5 million Canadians are facing financial vulnerability, according to a report from the Financial Resilience Institute released in October 2023.
What are the saving habits of Canadians?
Currently, 79% of Canadians say they have less disposable income than prior years, according to H&R Block Canada.
Just 30% of Canadians say they're currently putting money away in savings, with 66% saying they feel that they don't have enough money left over from their paycheque at the end of the month to build up their savings.
Three-quarters (75%) are concerned about not putting enough money into savings, and 54% say they try to ignore the feeling that they need to put more money aside.
Meanwhile, 25% are not concerned about not saving money.
Looking ahead, 82% say they're likely going to have to put less into a savings account given the increased cost-of-living. And 50% say they're unable to save money for long-term goals like retirement or a home, as their paycheque goes to their immediate needs.
Canadians are favouring the Tax-Free Saving Account (TFSA) over Registered Retirement Savings Plans (RRSPs) and other longer horizon investment vehicles, according to a prevopis report from the Canadian Imperial Bank of Commerce (CIBC).
How can financial well-being be improved?
Previously, Salene Hitchcock-Gear, president of Individual Life Insurance at The Prudential Insurance Company of America, shared the following tips which employers can share with their workers to help them with their financial well-being journey:
Take it one day at a time: “A key to achieving financial wellness is organizing and understanding your day-to-day finances, then creating a budget you’ll be able to follow. By tracking your spending, you can see where your money is coming from and going to, and it will be easier to take bigger steps, such as paying down debt or building an emergency fund.”
Set financial goals: “While retirement is just one example, other financial goals can include buying a house or saving for your child’s college tuition. Setting short- and long-term financial goals, and making progress toward them, can play a big role in achieving overall financial wellness.”
Protect against risk: “Protecting yourself — and your loved ones — against serious financial disruptions and setbacks can help alleviate stress as you look to the future. From life insurance to health insurance to retirement savings, having the resources to navigate and manage financial challenges such as unforeseen illness or injury, or the premature death of a spouse, can be key to a financially secure life.”
