I read a disturbing article in the Globe and Mail recently about how 59% of employed Canadians are living paycheque to paycheque. What does that actually mean? Simply that 6 out of 10 Canadians would be in financial trouble if their pay cheque was delayed by a week. Yes… a week.
Here is an excerpt from the article:
Fifty-nine per cent of Canadian workers say they would be in financial trouble if their paycheque was delayed by just a week – the same proportion as last year when the economy was still mired in a downturn, according to a poll of 2,766 people by the Canadian Payroll Association.
Almost half, or 47 per cent, are saving 5 per cent or less of their net pay. Sixty per cent of workers have been trying to save more than a year ago, though over half of them have been unsuccessful in doing so. Forty per cent say they’re not even trying to save.
I can see new grads living paycheque to paycheque as pay is generally lower, student debt can be high, and starting out on your own is expensive. However, as pay increases and bills stabilize, savings and investments ideally should start to grow. At the minimum, a fall back plan should be initiated (ie. an emergency fund or emergency line of credit). Unfortunately, the truth for most is that more money earned simply results in greater expenses.
I’ll be the first to admit that we lived paycheque to paycheque when we first started our financial journey after graduation a little over 7 years ago. But we dug ourselves out of what seemed like a never ending cycle by keeping our expenses as low as possible and saving any extra income (ways to save money). Today, although our family income is higher as we are well into our careers while running a side business, we still aim to keep our expenses under control while investing our excess cash flow.
What do you think of the statistic? Does it surprise you that 60% of employees live paycheque to paycheque?If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).