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Over 50% of Canadians live paycheque to paycheque, carry credit card debt

The annual BDO Affordability Index finds that over half of Canadians are living paycheque to paycheque and carry the burden of credit card debt.

 Photo: Empty Wallet / ShutterstockPhoto: Empty Wallet / Shutterstock

The annual BDO Affordability Index finds that over half of Canadians are living paycheque to paycheque and carry the burden of credit card debt.

Conducted by Angus Reid in partnership with BDO Canada Limited, a poll of 2,047 Canadians shows that 53% of Canadians continue to live paycheque to paycheque, and that debt remains overwhelming for 25%. In addition, a quarter of Canadians, or 27%, don't have enough to meet their needs, while less than half, or 42%, don't have enough to meet their wants.

The poll found that 57% of Canadians carry credit card debt, which is up from 53% in 2018. For 31% of Canadians, "debt is increasing due to income constraints." In addition, three-in-ten Canadians have delayed paying off their credit card balances while four-in-ten have a non-mortgage debt load of over $20,000.

"Affordability and debt challenges continue to weigh on Canadians, and what our Affordability Index reveals is that, over time, the cumulative effects have a significant impact on financial goals," says Doug Jones, president of BDO Canada's Financial Recovery Services practice.

"However, for people with unmanageable debt, a Licensed Insolvency Trustee can help them understand their options and become more financially prepared for the future."

The study also found that 39% of Canadians have no retirement savings, including 32% of boomers and seniors. Almost four-in-ten Gen Xers have no retirement savings, and they continue to be the most indebted generation.

According to the study, women face more affordability challenges in Canada than men:

"Women are more likely to have growing debt due to lack of income (35% of women vs 28% of men), and are more likely to struggle to save for a major purchase (75% women vs 70% men), afford grocery bills (33% women vs 24% men) and take a vacation (70% women vs 63% men)."

The study also found that women faced more affordability challenges in 2019 than in 2018, and that a growing number live paycheque to paycheque. More women also admit to having no retirement savings.

In July, the Canadian Centre for Policy Alternatives released a rental housing wage report for cities across Canada and Vancouver was ranked the least affordable. The report found that a full-time worker in Vancouver would need to make $35.43 per hour to afford an average-priced two-bedroom apartment. In order to afford an average-priced one-bedroom apartment, a minimum wage earning Vancouverite would have to work a whopping 84-hour workweek.