More Canadians Are Living Paycheque to Paycheque

Household Finances in Crisis: The Alarming Rise of Canadians Living Paycheck-to-Paycheck

The cost-of-living crisis has taken a severe toll on the financial well-being of millions of Canadians, with a growing number struggling to make ends meet and living paycheck-to-paycheck. As inflation soars and the price of essential goods and services skyrockets, Canadians are finding it increasingly difficult to save, pay off debts, and plan for the future.

The Paycheque-to-Paycheque Epidemic

The BDO Canada Affordability Index reveals a concerning trend – over half of Canadians (54%) now report living paycheck-to-paycheck, a three-percentage-point increase from the previous year. This means that more than half the population is barely able to cover their basic expenses with each paycheck, leaving little to no room for savings or unexpected costs.

Essentials Becoming Unaffordable

The affordability crisis is most acutely felt in the ability to pay for essentials. The share of Canadians who say they have enough money for their basic needs has dropped from 70% to 66% in just one year. With inflation driving up the costs of groceries, utilities, and other necessities, more and more households are struggling to make ends meet.

Debt Levels Spiraling Out of Control

Debt is a growing concern for Canadians, with 82% reporting that their debt levels have increased, up 14 percentage points from the previous year. Alarmingly, 42% of respondents say their debt has become “overwhelming” – nearly double the 2021 figure. This debt burden is crippling the financial resilience of households across the country.

Savings and Spending Habits in Flux

The financial strain is also evident in Canadians’ ability to save and spend. Inflation has left many with less disposable income, forcing them to cut back on discretionary spending and reduce their savings.

Declining Savings Rates

Six in ten respondents are saving less than they were in 2021, or not saving at all. This is a concerning trend, as it leaves households more vulnerable to unexpected expenses and reduces their ability to plan for the future, such as retirement.

Cutbacks on Discretionary Spending

Canadians have had to make difficult choices, with 61% reporting they have cut spending on restaurants and takeout, 60% on travel, and 53% on home electronics. These cutbacks reflect the tough decisions families are making to prioritize essential expenses over leisure and entertainment.

Age and Regional Disparities

The impact of the cost-of-living crisis is not felt equally across all demographics and regions in Canada.

Younger Canadians Hardest Hit

Younger Canadians, particularly those aged 18-24, are disproportionately affected, with 53% of this age group living paycheck-to-paycheck and a staggering 67% having no retirement savings at all. This underscores the significant financial challenges faced by the younger generation as they navigate the transition to adulthood and independence.

Regional Variations

The affordability crisis is more severe in certain regions of the country. Over half of respondents in Atlantic Canada, Manitoba, and Saskatchewan report living paycheck-to-paycheck, compared to 38% in Quebec and 42% in British Columbia. These regional disparities highlight the need for targeted policy interventions to address the unique challenges faced by different communities.

Implications and Concerns

The widespread prevalence of paycheck-to-paycheck living and growing debt levels have far-reaching implications for both individual and societal well-being.

Reduced Financial Resilience

The lack of savings and increasing debt burden leave Canadians more vulnerable to unexpected financial shocks, such as job loss, medical emergencies, or economic downturns. This reduced financial resilience can have cascading effects on mental health, family stability, and overall quality of life.

Implications for Retirement and Long-Term Planning

The alarming finding that one-third of Canadians believe they will never be able to retire, despite wanting to, underscores the significant challenge of saving for the future. This trend jeopardizes the long-term financial security of a large segment of the population and raises concerns about the sustainability of retirement systems.

Potential Economic Consequences

The widespread financial strain experienced by Canadians could have broader economic implications, as reduced consumer spending and increased debt levels can dampen economic growth and stability. This, in turn, could further exacerbate the affordability crisis, creating a self-perpetuating cycle of financial distress.

Government and Policy Responses

Addressing the growing paycheck-to-paycheck crisis and its underlying causes will require a multi-faceted approach from policymakers and government leaders.

Enhancing Social Safety Nets

Strengthening and expanding social safety net programs, such as income support, housing assistance, and access to affordable healthcare, can help alleviate the financial burden on struggling households and provide a crucial safety net during times of economic uncertainty.

Promoting Financial Literacy and Education

Investing in financial literacy and education initiatives can empower Canadians to make more informed decisions about budgeting, saving, and debt management, equipping them with the tools to better navigate the complexities of the current economic landscape.

Implementing Targeted Policies

Targeted policies, such as tax credits, subsidies, and regulatory measures, can help address the specific challenges faced by different demographic groups and regions, ensuring a more equitable and inclusive approach to addressing the affordability crisis.


The alarming rise in the number of Canadians living paycheck-to-paycheck is a clear indication of the growing financial strain and vulnerability experienced by households across the country. As the cost-of-living crisis continues to squeeze budgets and erode financial resilience, it is imperative that policymakers, community leaders, and the public work together to develop comprehensive solutions that address the root causes of this crisis and provide much-needed support to those struggling to make ends meet.

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