For Half Of Canadians, Just $200 Is The Difference Between Paying Bills And Not

How much money do you have left over each month after paying bills and meeting your expenses? A few hundred dollars? Maybe a thousand? Well, according to a new study put out by MNP, a national accounting firm, half of Canadians only have $200 or less. That means that if their income drops by just $200 per month, they’d be in very serious trouble.

This leaves half our country vulnerable even with the slightest changes in month-to-month living. A small car repair or a pet’s ear infection, a broken window or a lost phone could all be the tipping point for a financial meltdown.

What’s worse, is that 31% of Canadians who took the survey reported that they believe a slight increase in interest rates would send them in a downward spiral towards bankruptcy and foreclosure.

Ultimately, this can be boiled down to several causes:

The cost of living in Canada seems to be rising faster than our income is

Even if we’re not homeowners, renting in many of Canada’s major cities is unaffordable for average Canadians. The housing market in Canada is out of control and it’s forcing many Canadians to live on the edge.

Low-interest rates

As interest rates have remained fairly low in Canada, more Canadians have felt encouraged to take advantage. This has led to an increase in consumer debt to income ratio… the largest of any G7 country since 2000.

Lacking “Financial Fitness”

We can’t use the skills we don’t have and sadly, in Canada, money management skills are not a priority in our public education system. Most Canadians graduate without much of an idea of how to manage their money, leaving it entirely up to the parents to impart their wisdom. As such, many Canadians grow well into adulthood having to learn the hard way. At Refresh Financial, we make sure our clients are armed and equipped to take on their own finances with our Financial Intelligence Training (Refresh f.i.t.) - imparting our financial knowledge and know-how is free for all of our clients. Sign up now for access. Click here.

Unemployment

Unemployment is not terrible in Canada, but there are some areas of the country where finding work is nearly impossible.

There are no simple solutions to this problem, but here are some proposed ideas that could help:

Government taking more action against the rising housing costs across Canada

While some Provincial governments have slowly implemented new rules to slow the market down a little bit, it’s still wildly out of control. Even hardworking Canadians who make good money are finding home ownership impossible and renting is become nearly as expensive as owning.

Universal basic income

While this seems like a wild idea, it has been a phrase we’re hearing more and more. As automation and artificial intelligence make massive strides every day, more and more Canadians will find their jobs being filled by machines and tech and without an income. Ontario is even set to launch a 3-year pilot program this year, testing out basic income.

Financial education

There needs to be a much, much higher priority placed on teaching Canadian students all about money. It should be right up there with the basics, so that students can leave school equipped with the knowledge to manage their own money, save for the future, and avoid huge financials risks and pitfalls.

Mostly, however, the work is going to have to be done on an individual level. Canadians are going to have to pull themselves out of debt to free up some of their income and stop living on the verge of default or bankruptcy. You can get a headstart on paying bills and paying down your debt with a credit building program from Refresh Financial. With it, you also get access to Refresh f.i.t., so what are you waiting for! Take the first step to better financial health. Click here.

What do you think are some of the other causes of Canadians living near this financial threshold? Let us know in the comments!