Elena Delgado picks up food during a visit to the Daily Bread Food Bank on April 18. Delgado has been using the food bank once a week since the pandemic began.Fred Lum/the Globe and Mail
Saijal Patel is the founder and chief executive officer of Saij Wealth Consulting, a consultancy and education platform dedicated to empowering women’s financial independence and security.
As a financial educator and a business TV host, I’m witnessing firsthand the profound impact that recent economic changes have had on the psyche. There’s a notable shift in conversations – from what used to be on investment strategies and retirement planning, to now finding ways to maximize limited resources and preventing overwhelming debt. There’s a prevailing sense of hopelessness in achieving financial goals.
According to Bank of Nova Scotia’s recent Worry Poll, 73 per cent of those surveyed had high levels of concern over the rising cost of living. Those who worried spent the most time stressed about paying for day-to-day expenses (44 per cent), paying off debt (39 per cent) and saving for emergencies (38 per cent).
Amid the current cost-of-living crisis, traditional personal financial advice is becoming outdated. And as its impact on the financial well-being of Canadians wanes, the role of another factor has grown and is threatening to eclipse all others: politics and government policy. Now, more than ever before, the primary influence on Canadians’ financial well-being is a force largely outside of their control.
Advisers and influencers can no doubt play a crucial role in empowering individuals to take the first step toward financial stability. They can help them prioritize what they can control, such as gaining awareness of their spending habits and acquiring savings extraction skills.
But so many experts, when asked for advice on what people who are financially stressed can do, often advocate budgeting or to follow a certain golden rule (that someone made popular), even when it is nonsensical or impractical. There’s a floor to how much, and where one can cut costs. Everyone needs an adequate living space, decent food on the table and basic necessities, all of which have skyrocketed in expenses.
Take for example, the 50-30-20 rule in budgeting that many personal financial experts tout. It recommends that 50 per cent of your net income go toward living expenses and essentials (needs), 30 per cent toward discretionary spending (wants), and 20 per cent toward savings (emergency funds and future goals).
According to Statistics Canada, the median after-tax income for households was $73,000 in 2020. Based on this, no more than $36,500 or $3,041 per month should be allocated to one’s essentials. Yet the average monthly rent in Canada stands at approximately $2,000 (rising to $3,000 in the Greater Toronto Area), and the average monthly grocery bill is $1,065 for a family of four.
Without even factoring in utilities, clothing, medicine and transportation expenses, it becomes unmistakably clear that adhering to these benchmarks would be unattainable for the majority of Canadians. In fact, the most recent National Bank’s Housing Affordability Report revealed that the average Canadian would need an annual income of $184,524 to purchase a “representative home” (more than two times the median).
Hence, a rule of thumb by Canada Mortgage and Housing Corporation, which suggests housing costs shouldn’t be more than 32 per cent of one’s gross income, is out of touch with reality. Given the stark choice between homelessness and incurring debt or cashing out their retirement savings, any reasonable person would opt for the latter.
The two biggest expenses Canadians face today are housing and taxes – both being under the control of the government. According to independent public policy think-tank Fraser Institute, the average Canadian family spent 43 per cent of its income on taxes in 2021 – more than housing, food and clothing costs combined.
To truly champion people’s financial well-being, we must acknowledge that many of our most significant financial hurdles don’t lie solely within individuals’ control, but rather in the hands of our elected leaders and the policies they shape or neglect.
Financial education is the key if we are to ensure individuals and, collectively, our society is prosperous. For one, it equips individuals with the skills to effectively manage their finances where they can. Secondly, it enables them to discern when politicians merely offer empty rhetoric or false promises – and to instead demand transparency, accountability and evidence-based policies that directly influences their economic needs and financial well-being.
Personal finance is inherently intertwined with politics. Denying this reality or claiming that political discussions are inappropriate means disregarding the profound impact of government policies on the economy, or the financial health and security of individuals.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
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